Top-ranked sectoral mutual funds for 2024: A look at high performing schemes across major sectors

Sectoral/thematic mutual funds have gained popularity in recent years as they have managed to deliver impressive returns. The testament to their popularity is the annual AUM growth of 112.22% in September 2024 and a 5% rise in a month. In FY25 sectoral/thematic funds have contributed 47% of inflows till September, amounting to ₹96,489 crore.

If you are considering investing in the sector, mutual funds could be an option. Here are toppers of the major sectoral/thematic mutual fund categories which have shown strong performance over the past year.

What is a sectoral/thematic fund?

Sectoral funds are equity mutual funds that concentrate on companies within a particular industry, such as technology, healthcare, energy, or financial services, among others. As per AMFI regulations, sectoral funds must allocate a minimum of 80% of their assets to stocks from that specific sector. This investment strategy carries greater risk because of its focus on a single sector.

Currently, there are over 180 sectoral mutual fund schemes available, in which over ₹13,000 crore has been invested in September 2024. Total assets under management (AUM) of sectoral/thematic schemes stand at ₹4.67 lakh crore. In this story, we will discuss eight major sectoral/thematic mutual funds’ top-ranking schemes.

1. Invesco India Financial Services Fund (Banking and Financial Services): This fund has a focus on the banking and financial services sector and its AUM stands at ₹1,043.44 crore with an expense ratio of 2.23%. It has returned 36.96% in the previous one-year period and has beaten its index, the Nifty Financial Services TRI, which gained 26.19%.

2. ICICI Prudential FMCG Fund (FMCG): This fund with a focus on the FMCG sector has an AUM of ₹1,884.67 crore and a total expense ratio of 2.14%. It posted a one-year return of 14.29% which is lower than the Nifty FMCG TRI, the fund’s benchmark, whose return was 18.98%.

3. LIC MF Infrastructure Fund (Infrastructure): This infrastructure fund, possessing an AUM of ₹750.04 crore and an expense ratio of 2.4%, registered an astonishing one-year performance of 69.35%, way above the benchmark Nifty Infrastructure TRI which was at 44.88%.

4. HDFC Pharma and Healthcare Fund (Pharma and Healthcare): This fund, which invests in the healthcare sector, has an AUM of ₹1,303 crore and an expense ratio of 2.18%. The fund has also recorded a very impressive one-year return of 65.26% which outperformed the BSE Healthcare index return of 57.44%.

5. Franklin India Technology Fund (Information Technology): Targeting the technology sector, this fund holds an AUM of ₹1,903.89 crore and has a 2.1% expense ratio. It recorded a one-year return of 44.41%, beating its benchmark, the BSE Teck, which rose 36.22%.

6. DSP Natural Resources and New Energy Fund (Energy): The mentioned fund is an energy-focused fund with an asset under management of ₹1,335.59 crores and an expense ratio of 2.09%. For the past year, the fund has generated a return of 44.48%, doing much better than its composite benchmark (35% S&P BSE Oil & Gas Index +30% S&P BSE Metal Index + 35% MSCI World Energy 10/40 Net Total Return) which returned 26.87%.

7. Quant Manufacturing Fund (Manufacturing): With an AUM of ₹1,099.87 crore, this fund will focus on the manufacturing sector and has an expense ratio of 2.17%. It has logged a one-year return of 55.89%. The fund's benchmark, the Nifty India Manufacturing TRI, recorded a return of 53.12%.

8. Invesco India PSU Equity Fund (PSU): Focusing on public sector enterprises (PSUs), this fund has an AUM of ₹1,435.71 crore with an expense ratio of 2.08%. This fund registered an impressive performance of 64.9% in one year, outperforming its benchmark BSE PSU which returned 63.19%.