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Thematic Surge

Publish Date: November 26, 2023

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Thematic mutual funds have caught the fancy of retail investors

Thematic mutual funds

Thematic mutual funds have caught the fancy of retail investors, with the category drawing an inflow of about Rs 14,000 crore in the past five months. Underscoring a spike in high-risk appetite among investors. This particular category has been drawing regular inflows since June 2023.

A month earlier, the segment witnessed a net withdrawal of Rs 169 crore in May 2023, as per data from the Association of Mutual Funds in India (AMFI). Ideally, investors with a quite high-risk appetite should go in for sectoral fund investing as the portfolio is concentrated in a particular sector. An investor who remains well-informed should zero in on such funds for investment purposes.

Thematic funds experienced an inflow of Rs 3,896 crore in October 2023. It was the second-highest amount in the equity category after small-cap funds. It drew an inflow of Rs 4,495 crore, as per the AMFI data. Furthermore, the segment witnessed an inflow of Rs 3,147 crore in September 2023, Rs 4,806 crore in August 2023, Rs 1,429 crore in July 2023. Also, Rs 459 crore in June 2023.

Among the sectoral funds category, banking sectoral funds have gained significant popularity among investors. Investors in banking sector funds are able to gain through betting on bank stocks. Historically, data highlights that in the past 10 years when S&P BSE Sensex has moved up by 203%, BSE Bankex is up by 282%. Thus highlighting the long-term outperformance of the banking sector.


Taking into account the past few quarters, banks have showcased higher growth in profits compared to several other sectors. Furthermore, microfinance and fintech firms provide a fillip to the overall banking sector. It can be tapped through banking sectoral funds by the investors. Thematic fund, which is one of the 11 equity fund categories, has assets under management (AUM) of Rs 2.18 lakh crore in October-end. The overall mutual fund participation in the country is on a steady rise. Also individuals park 6% of household savings in mutual funds, as per Indian Household Savings RBI Data 2023.

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