Definition of Sector Fund

What is a "sector fund"? What is the definition of the term "sector fund"?

A "sector fund" is a mutual fund that is focused on one specific sector.

For instance, a health care sector fund would own companies that are health care companies, while a technology fund would only stocks of tech companies.

Because sector funds are entirely focused on one sector, they will rise and fall based on the overall health of the sector. For instance, if you own a health care fund and the health care industry reacts negatively to a new piece of legislation, the performance of the fund will take a big hit.

Like with any other investment, sector funds should be used as part of an overall balanced investment strategy.

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