On the Effect of Sector Funds Investing Level in Industries on Customers Risk

Although appropriate diversification is one of the most important features of mutual funds, but nowadays we are faced with funds with more focusing on one industry and consequently decrease costs and increase the risk, which offer higher returns to their customers. An accurate quantitative and appropriate definition for sector funds and their function and purposes has not yet been presented in literature. This article firstly, classifies mutual funds of the statistical society into four groups by defining a decision tree, and by makeing fund of funds and drawing efficient frontiers for each group finds that return and risk increase as sectoral property increases. Finaly, by calculating volatility and beta as risk benchmarker for samples of funds of each group finds thaat sectoral property causes increasing of risk specially nonsystematic risk..