Sector funds, as the name suggests, give investors exposure to companies in a particular sector. For example, there are technology funds, pharma funds and commodities funds. But these aren't suitable for everyone. When these sectors do well, these funds can outperform; but when sectors go through a down cycle, these funds can cost you heavily. Therefore, it is important to get both entry and exit right in these funds. If you enter at the peak of the sector's business cycle it can be detrimental to your investments. If there is a sudden change in sector's dynamics and you delay your exit, it can wipe out your profits.