A sectoral fund is a type of equity fund where investors' money is channeled into businesses within a single industry or sector. These funds enable investors to concentrate their investments in specific economic sectors by funneling all their capital into companies of the chosen sector.

Sectoral funds operate by investing entirely in the stocks of companies from the same sector. They cover firms across the size spectrum from large-cap to mid-cap to small-cap, with the key requirement being their affiliation to the same industry. The main benefits of sectoral funds include potentially high returns if the selected sector performs well and opportunities for tactical allocation.

Those investors who are risk-tolerant, knowledgeable, and active in the market might find sectoral funds suitable. Nevertheless, it is essential to assess investment goals, risks, exposure limits, and tax implications before investing. Choosing the appropriate sectoral mutual fund is crucial.

ET Money simplifies investment in sectoral funds. By downloading the ET Money app or visiting their site, users can select their preferred sector, specify the investment amount and method, provide basic information such as PAN and bank details, and finalize their investment.

Remaining informed about market trends and consulting professionals before making investment decisions is vital. For further information on mutual funds, loans, NPS, insurance, fixed deposits, income tax, and personal finance, explore ET Money’s resources online.