How many special sectors would you prefer? That is a separate question, versus spreading the management risk among perhaps 3 funds or more that are targeted towards a related area.
Now, I suspect this wouldn't work in all investment areas. SP-500 oriented funds may not apply for such a consideration or challenge; as diversification would be limited.
Healthcare related is such a sector area that could perhaps support 3 holdings. Fidelity offers an easy view of this area:
---FBIOX, aging biotech companies in this space and a very hot fund last year; and a hot start this year, too. Likely not a medical area that will disappear anytime soon and perhaps finding more mergers in this area and also consolidations of small non-public companies into the existing large players.
---FSPHX, Fido's early entry (1981) into this select sector, and a fund we have had monies in a past life. Not a yield play (.3%), but the most broad based Fido health related fund which includes med. services, device makers, pharma and biotech, among others.
---FPHAX, the most direct play in the pharma area, 38% being foreign companies. A small yielding fund at 1.3%. Outlook in this area also towards mergers and buyouts.
These last two are part of available choices; but of less consideration for this house.
---FSHCX, health providers-hospitals, HMO's, service companies and some insurance companies.
---FSMEX, medical equipment/device makers. This area may have continued negative impact from provisions in the "healthcare law".
So, buy fund(s)s in a related investment area to spread the holdings and management decisions risk, yes?
Or don't you think this method is of any value?
We already use this method with some current fund holdings.
Your thoughts are appreciated.
Regards,
Catch
Comments
Regards,
Ted
M* Snapshot PRHSX:http://performance.morningstar.com/fund/performance-return.action?t=PRHSX®ion=USA&culture=en-US
PRHSX has done very well.
And we have been "catched on" before, too. We owned FSPHX for a number of years prior to 2007 and was one of our early equity holdings in the mid-80's. Looking around for some more add-ons in the coming months; if the equity gods are willing, eh?
Thanks,
Catch
Regards,
Ted
Regards,
Ted