Sector funds are a type of mutual fund or exchange-traded fund (ETF) that focuses on investing in a specific sector of the economy, such as technology, healthcare, or energy. By concentrating on one sector, these funds aim to capitalize on the growth potential of that particular area, allowing investors to gain targeted exposure to industries they believe will perform well. Investing in sector funds can be riskier than diversified funds because they are more sensitive to market fluctuations within their chosen sector. However, they can also offer higher returns if the sector performs well. Investors should carefully consider their risk tolerance and investment goals before choosing to invest in sector funds.