Smarter Money: Don't Put Your Money in a Minor-League Fund

Often, sector funds are run by the most junior managers. Yikes!
By Jim Cramer ,

So many of you continue to ask about sector funds and whether you should be in them. I have always disliked these funds because they are often the "minors" (as in the minor leagues) at fund families.

People work at the sector funds, and, if they do a good job, they can move up to run a bigger generalist fund. I think your money is too important to be given to people who may be cutting their teeth on it.

Sure, there are some stars in sector funds who can shoot out the lights. And there are some sectors that you may be overweighted in. But that's what you need a good manager for, to pick those sectors. Nobody ever comes out and says, "Hey, we put the minor leaguers in the sector funds because we are grooming talent."

So why do I say it then? Because I know it. Because I have tons of friends in the mutual fund industry and we all hold this truth to be self-evident: Junior folks run sector funds. If they are good, they move up. If they are bad, they get axed.

And you, the shareholder? You are fodder.

James J. Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. While he cannot provide personalized investment advice or recommendations, he invites you to send comments on his column to

jjcletters@thestreet.com.

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