Most mutual funds say they would prefer to wait for a couple of years before launching such schemes. The views are varied and come in the wake of a beginning made by Kothari Pioneer which has launched the first domestic information technology sector fund.

Mutual fund managers are already voicing concern over the sustainability of such sector-specific funds, more so for the infotech sector which is currently the market buzzword.

"Sector-specific funds increase the risk as the flexibility available to fund managers for diversification to hedge the risk on the portfolio is very low. Of course, the higher the risk the higher the returns but this depends on the fund manager," said Apple Mutual Fund's equity research head Hitesh Zaveri.

"The success of a sector-specific fund like the IT sector fund will depend on the amount of money garnered by the fund. This is because the number of companies that are available for investment are very few and, thus, only if the corpus is less will avenues for investment be available. Otherwise, the investment will have to be made in other companies leading to a diversion from the objective," said LIC Mutual Fund chief executive officer RG Sharma.

"In case of a sector there is always the risk of the country losing its competitive advantage. For example, if another country like China comes up and effectively starts competing with Indian companies, the dollar revenue would be seen drying up. Some companies are moving up the value chain but the question here is are they able to move in that direction fast enough," said the Sun F&C Mutual Fund chief executive officer Nikhil Khattau.

"Sector risk or industry risk threatens those firms that provide similar services or products. Sectors can have extreme ups and downs and, thus, mutual funds focussing on them carry these risks with them," said Alliance Capital AMC president Ajai Kaul.

"After all, it took Kothari three years of detailed research to take a decision to come out with the sector-specific fund and one expects other mutual funds to have done a similar job before they join the bandwagon," said a mutual fund head.

Moreover, even the Unit Trust of India has recently put on hold its banking and technology sector fund," he added.

At the same time, there is also pressure on the industry to innovate rapidly by offering investors a wider range of products in line with the international trends. Sector-specific funds, do not seem to be on most funds' priority list.