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Sectoral / Thematic Mutual Funds

As the name suggests, Sectoral funds are open-ended equity schemes with a large corpus of investment in a specific sector. These funds concentrate their investment portfolio on equities of companies across different market capitalizations in a particular sector. Some of the most common sectors in India are energy, infrastructure, healthcare, utilities, etc. View More

Sectoral funds can deliver market-beating returns to investors in favorable times when the specific sector is expanding and performing well. These funds allow people to use their knowledge of the market and economy to reap profits by investing in the best-performing stocks in a particular sector.

However, as these funds focus the portfolio on one sector, there is a higher concentration risk. There is less room for diversification, meaning the risk associated with sectoral funds is high. The losses associated with the funds can be huge when the market sees a bearish trend and the sector does not perform well.

The Indian economy comprises many sectors like pharma, banking, technology, etc. Some of these sectors can perform extraordinarily well in the medium to long term. Sectoral funds are aimed at helping investors capitalize on these opportunities. Moreover, these funds invest in companies from small to mid and large capitalizations; the only requirement is that they should come from the same sector.

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Sectoral / Thematic Mutual Funds List

Filters
logo SBI PSU Fund - Direct Growth

8.28%

Fund Size (Cr.) - 4,149

Invest
logo Invesco India PSU Equity Fund - Direct Growth

7.13%

Fund Size (Cr.) - 1,047

Invest
logo HDFC Infrastructure Fund - Direct Growth

7.68%

Fund Size (Cr.) - 2,105

Invest
logo Aditya Birla SL PSU Equity Fund - Direct Growth

-0.42%

Fund Size (Cr.) - 4,651

Invest
logo ICICI Pru Infrastructure Fund - Direct Growth

10.75%

Fund Size (Cr.) - 6,886

Invest
logo Nippon India Power & Infra Fund - Direct Growth

6.72%

Fund Size (Cr.) - 6,125

Invest
logo Franklin Build India Fund - Direct Growth

10.13%

Fund Size (Cr.) - 2,406

Invest
logo Bandhan Infrastructure Fund - Direct Growth

11.61%

Fund Size (Cr.) - 1,400

Invest
logo Franklin India Opportunities Fund - Direct Growth

19.24%

Fund Size (Cr.) - 5,517

Invest
logo DSP India T.I.G.E.R. Fund - Direct Growth

11.61%

Fund Size (Cr.) - 4,465

Invest
View More

Who Should Invest In Sectoral Mutual Funds?

Sectoral funds can certainly be rewarding if investors can hit the right spot. However, due to a lack of diversification, they also have a high risk associated with them. So, one should only consider this type of fund after considering their financial goals, risk appetite, and investment horizon. Sectoral funds are an ideal investment option for: View More

Active and Informed Investors – Sectoral funds are unsuitable for beginners and inexperienced investors. Investments in these funds require timing the entry and exit right, which experienced traders struggle with. Active investors who are always on top of the latest news and happenings in the market can understand which sector is likely to perform well in the medium to long term. These funds are suitable for experienced investors with good knowledge of the sectors and insights based on thorough research.
Investors with a Good Risk Appetite – Sectoral funds invest in specific sectors and lack diversification which means they are high-risk schemes. Hence, investors comfortable with risky investments should only consider these funds.
Investors Interested in Tactical Allocation – Some sectors are cyclical, so investors willing to risk getting exposed to companies at the bottom of their cycle can invest in sectoral funds to make profits. You can choose a sector at the bottom of the cycle and hold the investment till it achieves its optimum performance before selling the funds to take profits.

Popular Sectoral / Thematic Mutual Funds

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 4,149
  • 3Y Return
  • 32.71%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 1,047
  • 3Y Return
  • 31.29%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 2,105
  • 3Y Return
  • 30.67%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 4,651
  • 3Y Return
  • 30.38%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 6,886
  • 3Y Return
  • 30.25%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 6,125
  • 3Y Return
  • 30.12%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 2,406
  • 3Y Return
  • 29.33%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 1,400
  • 3Y Return
  • 28.77%

  • Min SIP Investment Amt
  • ₹ ₹ 500
  • AUM (Cr.)
  • ₹ 5,517
  • 3Y Return
  • 28.61%

  • Min SIP Investment Amt
  • ₹ ₹ 100
  • AUM (Cr.)
  • ₹ 4,465
  • 3Y Return
  • 27.94%

FAQs

Thematic funds are ideally suited for investors with high-risk appetites and a certain conviction regarding the oncoming broad-based trends they are interested in pursuing.

Investors risk a substantial downside due to high exposure to specific trends and themes. These opportunities fail to materialize, which is why it is best suited for investors with a diverse portfolio of other assets, which can protect any substantial losses from such concentrated holdings.

Any fund with allocations concentrated in a particular sector remains vulnerable to headwinds affecting that sector.

For example, rising interest rates can have a major short-term impact on real estate and construction stocks, so a fund focused on this sector can witness a significant drawdown across all its key holdings.

Such funds are mainly suited for investors who already maintain a portfolio of diverse holdings and are looking to spruce returns or hedge against certain events.

In a thematic fund, portfolio managers often pick stocks that revolve around a particular trend or idea.

For example, if robotics is believed to have a shining future in the coming years, the thematic fund focused on the same will allocate assets to stocks such as ABB, and KUKA, which have a strong robotics play, along with integrators and managed service providers such as Infosys, TCS, and HCL.

With this, investors with high levels of conviction regarding the vibrant future of a particular sector can make the most of it with concentrated exposure to the same.

Thematic funds have witnessed quite the frenzy in recent years, and new funds and options continue to spring up every few weeks, targeting specific trends and the investors who want to make the most of it.

Any long-term secular opportunity can be tapped into, including climate change, ESG, machine learning, fintech, and more.

There are, infact, thematic funds dedicated toward emerging market holdings, space exploration, and even video games.

While the differences are already quite evident, at their core, both concepts aim at differing objectives and target different breeds of investors.

A thematic fund usually takes a long-term view of various macroeconomic, geopolitical, and technological tailwinds and aims to capitalize on the same. These aren’t for investors who are looking to capture swings in the market.

On the other hand, a sectoral fund is focused on a particular sector. It is usually the purview of investors and traders looking for exposure owing to upcoming short-term events. They are also used for hedging when anticipating pullbacks in the broader market.

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