A Sectoral Fund is a type of mutual fund that invests primarily in a specific sector or industry, such as banking, IT, pharma, or infrastructure.
Sectoral Funds concentrate their investments in one particular sector, aiming to benefit from the growth of that industry.
Because of this focused approach, these funds can offer high returns during sector growth, but also carry higher risk if the sector underperforms.
In India, sectoral mutual funds are regulated by the Securities and Exchange Board of India.
"An investor invests only in a banking sector mutual fund to benefit from growth in financial services."