As per the latest AMFI data for April month, equity schemes continued to rake in net inflow for the 14th consecutive month and of them thematic or sectoral fund category netted the most inflow. This was partially on account of the launch of the NFO within the category that garnered huge sums. Here we will tell you what are thematic funds and the top CRISIL rates funds within the category.
What are Thematic or Sectoral Funds?
Thematic or sectoral equity mutual funds as the name suggests are theme or sector based funds focusing on a particular theme or sector. They unlike diversified schemes are concentrated around a particular sector such as banking, pharma, information technology, real estate, energy, etc. Further in case of the thematic funds, they invest corpus in stocks that offer a particular opportunity. These are indeed much more diversified in comparison to sector funds.
Who should invest in sectoral or thematic schemes?
Sectoral and thematic mutual fund schemes should be lapped up by investors with high risk appetite and putting more than 10% into the category shall never be a good idea. Typically these investments are suitable for investors with knowledge of the markets and specific sector as a whole. Also as these sectoral schemes are cyclical in nature you need to know when to exit them.
Another point worth noting while choosing a sectoral or thematic schemes is that when you choose the fund within this category you need to know of the outlook/opportunities for the sector or theme ahead.
Top 5-Star CRISIL Rated Sectoral/ Thematic Funds:
|Sectoral/Thematic funds||CRISIL Rating||NAV||1-year return||3-year return||5-year return|
|Sundaram Rural and Consumption Fund -Direct Plan||5 Star||56.34||9.35%||10.97%||6.82%|
|DSP Natural Resources and New Energy fund- Direct Plan||5 Star||56.74||3.75%||19.91%||12.62%|
|Invesco India Infrastructure Fund-Direct Plan||5 Star||32.54||19.19%||22.14%||13.64%|
|BOI Axa Manufacturing and Infra fund||5 Star||29.21||13.13%||22.02%||12.97%|
CRISIL Mutual Fund Ranking (CMFR) is based on global best practices. It was launched in June 2000 and since then it has gained high acceptance among investors, intermediaries and asset management companies.
CMFR covers various categories across equity, debt and hybrid asset classes. Unlike most other ranking models, which are based purely on returns or net asset value (NAV), CMFR uses a combination of NAV and portfolio-based attributes for evaluation. This provides a single point analysis of mutual funds, taking into consideration key parameters such as risk-adjusted returns, asset concentration, liquidity and asset quality.
The above mutual fund category is a highly risky and volatile investment option, so investors should carefully analyse one’s risk profile before taking any such bets.