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What are Sectoral and Thematic Fund?

What are Sectoral and Thematic Fund?

Published on 15 December 2021 Views 18 Comments 0

1. Introduction

Nowadays investments are made in stocks of different sectors based on a particular theme. in this strategy if someone want to just focus on specific sector and follow a particular theme. Risk levels of these funds depend on the risk of the industry sector or the theme.

2. Meaning of Sector and Thematic Fund

A sectoral fund is a kind of mutual fund that purposes to wholly invest in specific sectors of the economy. Like Banking& Financial, FMCG, Healthcare.

A Thematic fund which invests in a specific theme rather than sector– there are several investments but they all have a common theme. In other words, Thus, investments made in thematic funds are broader and offers more diversification than sectoral funds.

These funds are mandated to invest minimum 80% in the underlying sector or theme. Commonly, sectoral or thematic funds focus on - Banking & Financial Services, Infrastructure, Technology, Pharma, MNC companies, FMCG and Real Estate.

Unlike other categories, where a fund house is mandated to keep maximum one fund in the category, there is no limit on number of Sectoral or Thematic funds a fund house can have.

Example: UTI Banking sector fund, ICICI Pru Technology Fund, Aditya Birla SL MNC Fund.

3. Types of Sector

a. Banking: These funds invest in Banking and Financial Sector. They are the most popular Sector funds in India. There are around 14 Banking sector funds currently in Indian market. For Example: Reliance Banking Fund.
b. Infrastructure: These funds invest majorly in capital goods companies which help in the infrastructure growth of the country. There are around 18 Infrastructure fund options available to invest. For Example: UTI Infrastructure Fund.
c. Pharma: They invest in stocks of Pharmaceutical or Healthcare companies. These funds became very popular in early part of this decade as the pharma sector gave extraordinary returns. There are total 6 funds focusing exclusively on this sector. For Example Reliance Pharma Fund.
d. Technology: These funds invest in technology or technology-dependent companies. Currently, there are 5 such funds in the Indian market. Example: ICICI Pru Technology Fund.
f. FMCG: These funds invest in Consumer Good companies. There are 2 funds dedicated to this sector. Example: SBI Consumption Opportunities Fund.

4. Types of Thematic Funds


a. MNC: This fund invests only in multinational companies listed in Indian stock exchange. Example: Aditya Birla SL MNC Fund

b. Energy: These funds invest in Energy and Power sector. Example: Reliance Power & Infra Fund

c. PSU: These funds invest only in Public Sector companies. Example: SBI PSU Fund

d. Consumption: They invest in consumption-oriented sectors (Automobile, Entertainment, FMCG etc). Example: Mirae Asset Great Consumer Fund

e. Automobile: These funds invest in Automobile and ancillary sector companies. Example: UTI Transportation & Logistic Fund

f. Ethical : These funds invest in Sharia Compliant equity investments. Example: Tata Ethical Fund

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