A sector fund is a mutual fund that invests in businesses operating in a specific sector such as FMCG, pharma, energy, information technology (IT), banking, etc. Since the investment portfolio is concentrated in a particular sector of the economy, these mutual funds offer low diversification and may involve comparatively higher risk levels.
The three broad features of Sectoral funds are:
The investment strategy adopted by sectoral funds is based on detailed research. This involves researching the sector-specific peaks across different timelines to identify the right sector to invest. Hence, investors should preferably have basic industry know-how to make the most of these fund investments.
Since sectoral funds are concentrated in a specific sector, these can be riskier as the fund performance will depend on the sector performance and dynamics.
While sectoral funds focus on a specific sector, the investment may be diversified across different market capitalisations. Thus, a single fund may invest across large-caps, mid-caps and small-caps as identified by the fund manager.
Investors who are looking to diversify their portfolio can explore sectoral funds, as these offer a specific sector exposure based on a strategic construct.
The below-mentioned points can help investors gauge if sectoral fund investments are suited for them:
Based on historical performance, here are the top fund options to invest in ultra short duration funds:
About Fund
The scheme aims to generate long-term capital growth through investment focus on equity of companies that are dependent directly or indirectly on the consumer sector in India.
| Inception Date | January 01, 2013 |
| Benchmark Name | NIFTY India Consumption Total Return Index |
| Fund Manager | Ankit JainSiddhant Chhabria |
| Expense ratio | 0.54% |
| Fund type | Open-ended |
| Risk | Very high |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 34.96% | 23.89% | 20.12% | 21.71% | 18.51% |
About Fund
The investment objective of the fund is to offer long-term capital growth by investing in a portfolio primarily consisting of equity and equity related instruments belonging to different infrastructure companies.
| Inception Date | January 01, 2013 |
| Benchmark Name | S&P BSE India Infrastructure Total Return Index |
| Fund Manager | Amit NigamNeelesh Dhamnaskar |
| Expense ratio | 1.44% |
| Fund type | Open-ended |
| Risk | High |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 57.49% | 35.88% | 26.90% | 20.75% | 18.77% |
About Fund
The scheme aims to offer long-term capital appreciation through an investment focus of 80% corpus in equity/equity related instruments of companies belonging to the Banking and Financial Services sector in the country.
| Inception Date | December 28, 2015 |
| Benchmark Name | NIFTY Financial Services Total Return Index |
| Fund Manager | Amey Sathe |
| Expense ratio | 0.87% |
| Fund type | Open-ended |
| Risk | Very high |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 15.86% | 9.97% | 16.12% | 18.04% | 18.57% |
About Fund
The scheme aims to fetch long-term capital growth by setting up and maintaining a portfolio of investments comprising equity and equity related securities. Only securities belonging to wellness, pharma, hospitals, diagnostics, healthcare and allied set-ups, are considered for investment.
| Inception Date | July 13, 2018 |
| Benchmark Name | S&P BSE Healthcare Total Return Index |
| Fund Manager | Dharmesh Kakkad |
| Expense ratio | 1.05% |
| Fund type | Open-ended |
| Risk | High |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 10-Year |
| 18.28% | 42.90% | 30.08% | 25.15% |
About Fund
The fund aims to offer capital growth and regular income by focusing investment in technology and allied companies. The scheme follows a bottom-up approach for stock selection and adopts a combination of value and growth investing styles.
| Inception Date | January 01 2013 |
| Benchmark Name | S&P BSE Teck Total Return Index |
| Fund Manager | Kunal Sangoi |
| Expense ratio | 0.88% |
| Fund type | Open-ended |
| Risk | High |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 72.53% | 65.73% | 46.00% | 34.78% | 27.46% |
About Fund
Quant Infrastructure Fund Direct-Growth is a Sectoral-Infrastructure mutual fund scheme from Quant Mutual Fund. This fund has been in existence for 10 yrs 4 m, having been launched on 01/01/2013. Quant Infrastructure Fund Direct-Growth has Rs. 853 Crores worth of assets under management (AUM) as on 31/03/2023 and is medium-sized fund of its category.
| Inception Date | January 01 2013 |
| Benchmark Name | NIFTY Infrastructure Total Return Index |
| Fund Manager | Vasav Sahgal, Ankit Pande |
| Expense ratio | 0.64% |
| Fund type | Open-ended |
| Risk | Very High |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 6.13% | 23.49% | 51.91% | 19.73% | 17.89% |
About Fund
SBI Technology Opportunities Fund-Growth is a Sectoral-Technology mutual fund scheme from SBI Mutual Fund. This fund has been in existence for 10 yrs 4 m, having been launched on 01/01/2013. SBI Technology Opportunities Fund-Growth has Rs. 2,813 Crores worth of assets under management (AUM) as on 31/03/2023 and is medium-sized fund of its category.
| Inception Date | January 09 2013 |
| Benchmark Name | S&P BSE Teck Total Return Index |
| Fund Manager | Saurabh Pant |
| Expense ratio | 0.87% |
| Fund type | Open-ended |
| Risk | Very High |
Historical Returns of the Fund (annualised)
| 1-Year | 2-Year | 3-Year | 5-Year | 10-Year |
| 0.74% | 11.92% | 29.90% | 18.13% | 19.34% |
The capital gains generated from sale of sectoral fund investment are taxable as per the holding period of investment. Here are the details:
Sectoral funds are relatively riskier than other categories of equity funds. Since these funds focus their exposure within a sector, there is a higher concentration risk. The performance of these funds will therefore be aligned with the investment sector performance. Therefore, investors must first gather some understanding of the sector before including these funds as part of their investment portfolio.
Some of the factors that an investor can consider before investing in sectoral funds include investment horizon, risk-taking ability compared to the fund’s risk level, expense ratio of the specific fund, and overall weightage in an investment portfolio.
To invest in sectoral funds, an investor can download the Fisdom app, which offers a range of mutual fund products. It allows easy access to a wide variety of fund options based on risk levels, time horizon, and investment preferences.
Sectoral funds concentrate their investment within selected sectors whereas thematic funds may invest across sectors while following a certain theme for investment, such as infrastructure, power, etc.
Yes, sectoral funds are equity-based since they invest in equities of companies that belong to the chosen sector.
Some of the commonly chosen sectors under sectoral funds are technology, healthcare, real estate, finance, metals, communications, etc.
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