Alliance Buy India Fund will focus on businesses driven by India's large population and inherent consumption patterns. The focus of the scheme will be the consumer and healthcare sectors and include companies that derive a large percentage of their revenue from products or services supplied to other consumer companies.

Alliance New Millenium Fund will make investments in technology and technology-dependent companies. These will include an assortment of hardware, peripherals and components, software (products and services), telecom, telecommunications and media, internet and E-commerce and other technology enabled companies. As the name suggets, Alliance Basic Industries Fund will focus on investing in companies sensitive to economic cycles and commodity pricing cycles.

The primary objective of the umbrella fund is the growth of capital and the secondary objective is income generation and the distribution of dividend. The three schemes under the umbrella fund will have dividend and growth options and thus, will have six net asset values.

While the dividend plans of each scheme will pay annual dividends very March, the fund can pay interim dividends, subject to trustees approval. The dividend distributed by the funds will be 100 per cent tax-free, since these plans are equity-oriented and open-end in nature. The schemes will have 80-100 per cent investments in equities and equity-related instruments.

The initial issue expenses are pegged at 3 per cent for each of the three schemes. While the AMC will bear half the expenses, investors are likely to pay an entry load of 1.5 per cent, when buying into the funds. Thus, for every Rs 100 invested by the unitholder, Rs 98.5 will be available with the fund for investments in the markets.

The last one year has seen a flurry of fund launches, dedicated to specific sectors. Kothari Pioneer had set the ball rolling last year, when it launched its IT fund in August. While UTI, SBI and Kothari offer a range of sector-specific funds, Prudential-ICICI has a fund dedicated to the FMCG sector. Tata Mutual Fund also offers two funds which invest in core sector and life science & technology stocks, respectively. On the other hand, a number of AMCs like Birla and Alliance are now in the process of launching sector-specific funds.

``Investors must understand that these funds invest only in a particvular sector or industry and are thus, high-risk, high-return funds. The recent fall clearly demonstrated the perils of sectoral investing with IT and pharma funds being the biggest losers,'' says an analyst.

Funds are also launching sectoral schemes under an umbrella fund rather than launching each of the funds separately. ``The aim is to reduce the cost involved in selling and marketing the funds. Although each of the schemes has a separate expenses account, collective marketing brings down the initial expenses. Besides, the MACs can offer various flavours in one-go,'' says an analyst. In the recent past, UTI and SBI MF launched their sectoral funds under one umbrella.

Alliance Mutual Fund currently offers seven schemes; viz, Alliance '95, Alliance Capital Tax Relief '96, Alliance Liquid Income, Alliance Cash Manager, Alliance Equity Fund, Alliance Monthly Income and Alliance Government Securities Fund. All the schemes are open-end in nature and command a combined corpus of over Rs 1200 crore.