Specialty Funds

A specialty fund is simply any fund that focuses on a particular type of investment strategy that doesn’t clearly fall under the more common types of funds like bond funds, money market funds or equity funds. Rather than trying for broad diversification, specialty funds keep focused on smaller sectors of the economy, and typically have higher risk potential than other kinds of funds. In what follows, you’ll find out about the three main types of specialty funds, and why they may or may not make for good investments.

Within the field of specialty funds, there are three classes of fund that cover nearly all types of specialty funds. The first is a sector fund. Sector funds focus solely on a particular industry or part of the economy. By doing so, sector funds inherently lack the diversity of most other fund types, and thus smuggle in lots of risk; however, they also have potential yields far exceeding those of most other funds. The second main type of specialty fund is a regional fund. Regional funds limit their investments to specific geographical areas of the globe. They may only invest in certain continents, or can even only include companies from specific countries. What’s more, some regional funds combine with the strategies of sector funds; one example would be a tech fund focused solely on India based companies. Such a fund might yield high returns, but its success or downfall would depend both on the business side of the technology and regional influences in India