Investments, tenth edition

  Sector Funds 

  

Some equity funds, called  sector  funds, concentrate on a particular 

industry. For example, Fidelity markets dozens of “select funds,” each of which invests in 

a specific industry such as biotechnology, utilities, energy, or telecommunications. Other 

funds specialize in securities of particular countries.  

  Bond Funds   

As the name suggests, these funds specialize in the fixed-income sec-

tor. Within that sector, however, there is considerable room for further specialization. For 

example, various funds will concentrate on corporate bonds, Treasury bonds, mortgage-

backed securities, or municipal (tax-free) bonds. Indeed, some municipal bond funds invest 

only in bonds of a particular state (or even city!) to satisfy the investment desires of resi-

dents of that state who wish to avoid local as well as federal taxes on interest income. Many 

funds also specialize by maturity, ranging from short-term to intermediate to long-term, or 

by the credit risk of the issuer, ranging from very safe to high-yield, or “junk,” bonds.