Sectors Funds are mutual funds (or sometimes ETFs) which invest their corpus in businesses belonging to a particular sector or industry. These funds let investors take targeted bets on the yield potential of a particular industry or sector. As the portfolio of such funds is restricted to only a specific sector and is not diversified, they are considered to higher on the risk meter.

Examples of sectoral funds are Banking Funds, Technology Funds, Pharma Funds, FMCG Funds, etc.