Why Sector Funds Are a Bad Bet
These funds sound good on paper but can be difficult to use effectively.
Sector funds--which focus on stocks issued by companies in a specific corner of the economy--have become increasingly popular. These funds attracted about $97.6 billion in net new dollars during 2021. In addition, fund companies have rolled out about 100 newly minted sector-focused funds and exchange-traded funds over the past 12 months. These funds often appeal to investors looking to take advantage of emerging economic trends, such as growth in technology, infrastructure, and healthcare.