A SECTOR fund, in the narrowest sense of the term, refers to a mutual fund focusing on a particular industrial sector. Investment opportunities, whether they be in building products or environmentally friendly companies, are identified on a global basis. In Hong Kong, investors have yet to take to the concept with any great enthusiasm, preferring to diversify out of their home market through the multitude of country and regional funds available. However, fund mangers do offer industrial 'sector funds' in Hong Kong. One sector that has seen extensive growth is telecommunications, which in turn has attracted fund management institutions. Telecom funds are offered locally by Templeton and Dao Heng Fund Management, part of the Guoco group. Dao Heng launched its Dao Heng Asia Telecom Fund in October 1993. At the end of July this year, the fund was 49 per cent invested in Hong Kong, 20 per cent in Thailand, 10 per cent in Singapore and about 5 per cent each in Malaysia and the Philippines. About 10 per cent is held in cash. The biggest holdings were CN Telecom International, Hutchison Whampoa, Jasmine International Overseas, Singapore Telecom and United Communication. Minimum investment is US$5,000. Fund managers believe the leisure sector can be attractive, too. Invesco launched a mirror version of its United States Leisure Fund, the Invesco Global Leisure Fund, in 1994. The fund is run from Denver by fund manager Timothy Miller and achieved a 36.4 per cent return in the 12 months to July 1, according to Micropal. Another Hong Kong-authorised leisure fund, Guinness Flight's Global Leisure Fund, has consistently outperformed the Micropal Global Equity Index since it was launched in January 1985. The fund invests in leisure companies around the world involved in activities such as entertainment, catering, sport and holidays. As at July 1 this year, the fund had grown at an annualised 13.05 per cent in sterling terms since its launch, or 16.24 per cent in US dollar terms. Over the same period, the Micropal Index grew by 10.51 per cent and 13.62 per cent, respectively. The US$2 million fund has a minimum investment of $7,500 and is mostly invested in the leisure sectors in North America, Europe and Japan. It tries to hold a diverse portfolio of more than 50 stocks at any one time. In the 12 months to July 1, the Guinness Flight Global Leisure Fund grew by 23.17 per cent in sterling terms and 20.29 per cent in US dollar terms, while the Micropal Index rose by 18.49 per cent and 15.72 per cent respectively. 'Leisure stocks continue to attract attention as the trend towards rising consumer spending establishes itself in Britain and Japan,' the July fund report says. 'Expectations are also increasing that consumer spending will pick up in the US and Continental Europe in the second half of 1996.'