Sector & Thematic ETFs

How funds that focus on one industry or one big idea work, why their returns spread so far apart, and how to use them without turning your portfolio into a bet.

Slicing the market into pieces

A broad index fund owns the whole market. A sector ETF owns just one part of it, such as technology, energy, health care or banks. A thematic ETF goes narrower still, buying companies tied to a trend such as cybersecurity, clean energy, robotics or artificial intelligence.

These funds let you tilt your portfolio toward an area you believe in, or measure which parts of the market are leading. The price of that focus is less diversification and bigger swings.

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