WHY TO AVOID SECTORAL MUTUAL FUNDS

The idea behind investing in a mutual fund is to outsource the fund management activity to a professional fund manager.
By investing in a sectoral fund you are limiting the fund manager to invest in a particular sector. Even if the fund manager knows that the particular sector will not do well in the near future, he is forced to invest in that sector only. Also you take responsibility to shift your investments from a non performing sector fund to a performing sector.

Whereas in a diversified fund the fund manager gives higher allocation to the sector which he feels will do better in the near future and he reduces the exposure in the sector which he feel will not perform in the near future.
So it is better to outsource all these decision making to the fund manager. Why should you take decision and pay management fees to the fund house.
So focus on the diversified funds.