``If a particular sector in the market is doing well, we will segregate the sector into a separate plan under the fund. Investors will have the option to switch their investments and earnings on the debt portfolio will also accrue to that plan. The plan will have a separate net asset value,'' said Anil Sahgal, vice-president, Dundee Mutual Fund. ``While we have chosen five sectors, we will also evaluate and explore investment options in other sectors. The scheme will give investors the advantage of investing in a sector which is on the upswing and they can exit when the sector is on a downturn. This will help investors maximise returns,'' he added.

While an investor can invest in any one or more of the plans, the minimum investment for switching between the main fund and the plan is Rs 2500. The timing of the creation and/or merging back of plan will be decided by the fund manager and will be subject to the trustees' approval. However, given the risk-profile of investors in a balanced fund, their response to sector-specific plans remains to be seen. Investors in a balanced fund look for a blend of safety and returns while investments on a sector-specific basis can make the plan highly volatile. ``Investors in a balanced fund want returns which are higher than a debt fund while around 40 per cent investments in debt instruments gives a fair degree of stability to the fund. These investors may not risk their investments in a sector-specific plan or fund. For investors desirous of a sectoral exposure, there are sector-specific funds,'' points out an analyst. Counters Sahgal, ``Given the trend of investments in sectoral funds in the country, we expectinvestors to be comfortable with the concept.''

The AMC can merge the plan back into the main scheme if the sector is on the decline. The investors will have the option to switch back and forth, either partially or totally, between the plan(s) and the main fund. Under the dividend option, investors can choose from a monthly, quarterly, half-yearly and annual dividends. The AMC has set a mobilisation target of Rs 1 crore during the initial offer. Initial expenses to the extent of one per cent will be charged to the scheme while the rest will be borne by the AMC. Thus, the starting NAV of the fund will be Rs 9.90. While there will be no entry load, a contingency deferred sales charge of 1 per cent will be charged for investments upto Rs one lakh if they are redeemed within six months.