Chapter 14. Specialty Funds: One of a Kind

In This Chapter

  • Looking into real estate investment trust (REIT) funds

  • Getting the scoop on precious metals and commodities funds

  • Reviewing utility funds

  • Doing good with socially responsible and market neutral funds

In the other chapters in this part of the book, I explain the three major types of funds: money market, bond, and stock. Specialty funds, which tend to be stock funds, are often known as sector funds because they tend to invest in securities in specific industries. But, as you see in this chapter, some specialty funds hold securities in a variety of industries but engage in unusual strategies that separate them from their peers.

In addition to real estate and precious metals funds, other types of sector-focused funds I discuss in this chapter are commodity funds, and utility funds, which are popular with some investors who want more conservative stock investments. In addition, I cover specialty funds that engage in unusual strategies and invest in a wide range of industries — socially responsible funds and market neutral funds.

Sector Funds: Should You or Shouldn't You Invest in Them?


In most cases, you should avoid specialty or sector funds. Investing in stocks of a single industry defeats a major purpose of investing in mutual funds — you give up the benefits of diversification. Also, just because the fund may from time to time be dedicated to a hot sector (a sector fund or two is often at the top of short-term performance ...

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