Sector Fund

AAA

DEFINITION of 'Sector Fund'

A stock mutual, exchange-traded or closed-end fund that invests solely in businesses that operate in a particular industry or sector of the economy. Because the holdings of this type of fund are in the same industry, there is an inherent lack of diversification associated with these funds.

INVESTOPEDIA EXPLAINS 'Sector Fund'

These funds tend to increase substantially in price when there is an increased demand for the product or service offering provided by the businesses in which the funds invest. On the other hand, if there is a downturn in the specific sector in which a sector fund invests, the fund will often face heavy losses as a result of the lack of diversification in its holdings.

RELATED TERMS
  1. Fund Overlap

    A situation resulting from owning several mutual funds or exchange-traded ...
  2. Sector Analysis

    A review and assessment of the current condition and future prospects ...
  3. Vice Fund

    A mutual fund that invests in gaming, such as casino operators ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments ...
  6. Sector

    1. An area of the economy in which businesses share the same ...
Related Articles
  1. The Risks Of Real Estate Sector Funds
    Mutual Funds & ETFs

    The Risks Of Real Estate Sector Funds

  2. An Introduction To Sector Mutual Funds
    Mutual Funds & ETFs

    An Introduction To Sector Mutual Funds

  3. Socially (Ir)responsible Mutual Funds
    Mutual Funds & ETFs

    Socially (Ir)responsible Mutual Funds

  4. Financial Funds Provide Diversity ... ...
    Mutual Funds & ETFs

    Financial Funds Provide Diversity ... ...

comments powered by Disqus
Hot Definitions
  1. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  2. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  3. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  4. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  5. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  6. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
Trading Center