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.
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.
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