Best Large Cap Mutual Funds

Best Sector Mutual Funds

Sector Mutual Funds, also known as Sectoral or Thematic Mutual Funds, are specialised equity schemes focusing on specific sectors or themes in the economy. These funds invest in companies belonging to particular industries like technology, healthcare, or banking, or follow broader themes like ESG (Environmental, Social, and Governance) or infrastructure.

Key Benefits of Investing in Sectoral Mutual Funds

  • Growth Potential : Invest in high-growth sectors for potential significant returns
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Invest in Top 5 Sector Mutual Funds in India For 2026

Explore the list of top-performing sector mutual funds schemes curated by our experts

Quant Flexi Cap Fund Growth

  • Returns
    20.4%
  • Lock-In
    No Lock in
  • Min Investment
    ₹ 5000
  • Choice Rating

SBI ESG Exclusionary Strategy Fund Growth

  • Returns
    11.4%
  • Lock-In
    No Lock in
  • Min Investment
    ₹ 1000
  • Choice Rating

ICICI Prudential US Bluechip Equity Fund Growth

  • Returns
    13.4%
  • Lock-In
    No Lock in
  • Min Investment
    ₹ 5000
  • Choice Rating

Franklin Asian Equity Fund Growth

  • Returns
    2.1%
  • Lock-In
    No Lock in
  • Min Investment
    ₹ 5000
  • Choice Rating

You would have got

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Total Investment
₹ 1200
Expected Returns
₹ 13
Total Value
₹ 1213

Past performance doesn’t assure future results; actual outcome may vary due to market dynamics.

Your Investment Amount
  • 1
  • 2
  • 3
  • 4
  • 5
per annum

Understanding Sector Mutual Funds

How do Sector Mutual Funds Work?

Sector or Thematic Funds are equity schemes focusing on specific industries or investment themes. They pool money from investors to invest in companies aligned with their chosen sector or theme, such as technology, health care, or green energy.

Fund managers analyse sector trends, economic policies, and company fundamentals to curate a portfolio that aligns with the fund’s strategy. For instance, a sectoral thematic mutual fund focusing on renewable energy would primarily invest in solar, wind, and other clean energy companies.

Best Sector Mutual Funds FAQs

While Sectoral Funds focus exclusively on one industry, Thematic Funds follow broader investment themes, such as ESG (Environmental, Social, and Governance) or infrastructure, cutting across multiple industries.

These funds are ideal for investors with a higher risk appetite, sector-specific market knowledge, and those seeking to capitalise on high-growth industries.

Sectoral Funds carry risks like concentration risk (overexposure to one industry), market volatility, and sensitivity to economic and policy changes.

Look for funds with strong historical performance, experienced fund managers, reasonable expense ratios, and alignment with your financial goals and risk tolerance.

Yes, Sectoral Funds can be suitable for long-term investors who believe in the growth potential of a specific sector over 5–10 years.

  • Short-term capital gains (holding < 12 months): Taxed at 20%.
  • Long-term capital gains (holding @ge 12 months): Gains up to @rs 1.25 lakh are tax-free; gains above @rs 1.25 lakh are taxed at 12.5% without indexation.

Sectoral funds are highly sensitive to economic cycles. For instance, technology funds may thrive during a tech boom, while energy funds may perform well during periods of rising demand for energy resources.

Yes, but they should complement diversified equity funds to balance the portfolio's risk and returns, as sector-specific investments are more volatile.

  1. Define your financial goals and risk appetite.
  2. Research the best sectoral or thematic mutual funds.
  3. Choose an investment platform or distributor.
  4. Complete KYC formalities.
  5. Start with SIPs or a lump-sum investment.
  6. Monitor regularly.

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