Investors have many sector funds to choose from, spanning eight different Morningstar categories: communications, consumer discretionary, consumer staples, equity energy, financials, health care, industrials, natural resources, precious metals, real estate, technology, and utilities. Some sector funds focus more narrowly, homing in on a particular subsector of an industry. For example, Fidelity Select Biotechnology (FBIOX) is categorized as a health-care fund, but it invests in just biotech companies, which tend to have very different characteristics from medical suppliers and diversified pharma firms. Likewise, Fidelity Select Wireless (FWRLX) is a telecom fund that focuses entirely on wireless service providers and gearmakers. Given their more concentrated focus, these funds could be even more volatile than the typical sector fund.
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