A mutual fund in which the portfolio holdings are limited to securities belonging to a specific sector within an industry. By origin, a sector fund is an investment fund that solely targets businesses operating in a certain sector of the economy in order to have exposure to risks and rewards associated with such a sector, not the broader economy or industry. In addition to their structure as mutual funds, sector funds are also structured as exchange traded funds (ETFs).

A sector fund is typically invests all, or a large chunk of, its corpus (funds available for investing) in a specific sector.