I talked about the division of the mutual funds into industries, and I would like to go a little bit more into details today. When investors split mutual funds into industries, you may hear something like “energy sector fund”, “food sector fund” and so on.

Sector Funds specialize in only a particular sector of industry. For instance, Technology Funds go after high-tech industry companies that range from computers to components, electronics, defense systems, etc. Bio-tech funds invest in medical products such as genetic engineering and similar research. By the way, bio-tech can be one of the riskiest sector to invest into, but can make more money if there will be a scientific break-though; the reason of such high risk is the short financial history of the most of bio-tech companies. Health Funds invest in hospital management companies, medical equipment and drug companies. Energy Funds put money into utilities, oil, gas and exploration companies. And so on.

Gold
I can give you a good example of how to make money investing in a certain industry. Let’s take a look at the gold industry. If you invest into a mutual fund, which has all the assets in gold and mining companies, not only you make money off the high demand for gold (and high volatility), but also you have a good chance to earn cash dividends. Besides that, gold is a good hedge against the inflation, because precious metal prices usually follow inflation.

Make Money In Your Industry
If you are a specialist in a certain industry sector, and you know it very well, why not choosing the mutual funds belonging to that sector? There are numerous advantages of doing that: you know the ups and downs of the industry, and can predict the decline or incline of the profits inside the industry. That will greatly increase the protection of your assets and increase you chances of success: if you smell danger inside the industry, you can shift your money over to a Money Fund for a time being, thus waiting for a tornado to pass.

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