Sectoral Funds
Last Updated on 12 May 2026
3 Year Average Returns
18.21%
Funds on Anand Rathi
503
Sectoral Funds to Invest in 2026
| Fund Name | |||
|---|---|---|---|
| ICICI Pru Infrastructure Fund - (IDCW) | 13.22% | 23.99% | 26.04% |
| ICICI Pru Infrastructure Fund - (G) | 13.19% | 23.98% | 26.04% |
| Aditya Birla SL PSU Equity Fund (IDCW) | 19.48% | 27.95% | 25.77% |
| Aditya Birla SL PSU Equity Fund (G) | 19.45% | 27.96% | 25.77% |
| SBI PSU Fund (IDCW) | 19.43% | 30.14% | 25.65% |
| SBI PSU Fund (G) | 19.43% | 30.14% | 25.64% |
| Nippon India Power & Infra Fund (G) | 21.29% | 27.05% | 25.63% |
| Nippon India Power & Infra Fund (Bonus) | 21.29% | 27.05% | 25.63% |
| Nippon India Power & Infra Fund (IDCW) | 21.29% | 27.04% | 25.63% |
| DSP India T.I.G.E.R. Fund (G) | 23.78% | 27.21% | 25.54% |
| DSP India T.I.G.E.R. Fund (IDCW) | 23.78% | 27.21% | 25.54% |
| LIC MF Infrastructure Fund (G) | 23.93% | 29.39% | 25.13% |
| LIC MF Infrastructure Fund (IDCW) | 23.93% | 29.39% | 25.13% |
| Canara Robeco Infrastructure (G) | 18.32% | 25.56% | 24.65% |
| Canara Robeco Infrastructure (IDCW) | 18.26% | 25.58% | 24.63% |
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What Are Sectoral Mutual Funds?
Sectoral mutual funds are equity-oriented mutual funds that invest predominantly in a single, specified sector of the economy—such as energy, infrastructure, pharmaceuticals, technology, or financial services.
Also known as sector funds, these schemes invest at least 80% of their assets in equity and equity-related instruments of the chosen sector, resulting in a focused portfolio with a higher concentration than diversified equity funds.
How Does a Sectoral Mutual Fund Work?
In a sectoral mutual fund, the fund house pools money from multiple investors and invests it in a specific sector, as defined in the scheme mandate. The fund manager selects equity securities of companies operating within that sector based on research, growth potential, and prevailing market conditions.
As per SEBI regulations, a minimum of 80% of the fund’s assets is invested in equity and equity-related instruments of the chosen sector, while the remaining allocation may be held in debt, cash, or liquid instruments.
Due to its concentrated exposure, the fund’s performance is closely linked to the performance of the underlying sector. Sectoral funds may experience higher returns during favorable sector cycles, but may also be subject to higher volatility compared to diversified equity funds.
Who Should Invest In Sectoral Mutual Funds?
Sectoral mutual funds are generally suitable for investors seeking focused exposure to a specific sector and who understand the associated risks. These funds may be considered by:
- Investors with a high risk tolerance who are comfortable with the volatility associated with sector-focused investments.
- Individuals with a strong conviction in a specific sector or long-term theme (such as technology, infrastructure, or ESG) and who seek targeted exposure to it.
- Those investors who understand market cycles and are comfortable with concentrated portfolios rather than diversified holdings.
- Investors with a longer investment horizon of three years or more, as sectoral themes may take time to materialize.
How To Invest In Sectoral Mutual Funds With Anand Rathi
Looking to Invest in Sectoral Mutual Funds?
With Anand Rathi, investing in sectoral mutual funds is a simple 5-step process. Here's how you can get started:
Register or Log In
Visit the Anand Rathi platform or download the AR Invest app to sign up or log in instantly.
Complete Your KYC
Experience a quick, paperless onboarding with KYC completed in just a few minutes.
Explore Sectoral Mutual Funds
Browse 220+ sectoral and thematic mutual funds and find the one that suits you.
Choose Your Investment Mode
Invest your way—through SIP or lump sum, based on your financial goals, risk appetite, and comfort.
Monitor & Track Your Investments
Track NAVs, review fund performance, and watch your portfolio via a seamless, easy-to-use dashboard.
Factors To Consider Before Investing In Sectoral Mutual Funds
Before investing in sectoral mutual funds, investors should to evaluate the following factors carefully:
Sector Outlook & Growth Potential
Assess the sector's long-term prospects. Government policies, economic cycles, technological developments, and demand trends can significantly influence sector performance.
Market Cyclicality
Many sectors are cyclical in nature. Understanding the phase of the sector cycle is important, as investing at an unfavorable stage may impact returns despite strong fundamentals.
Risk & Volatility
While sectoral funds may invest in multiple stocks, they remain concentrated within a single sector. This can lead to higher volatility than diversified equity funds, making risk tolerance a key consideration.
Fund Manager Expertise
The fund manager’s experience and understanding of the sector play an important role in stock selection and portfolio positioning.
Expense Ratio & Costs
Investors should review the expense ratio, as higher costs may affect net returns over the long term.
Past Performance (With Caution)
Historical performance across market cycles may provide context, but past performance is not indicative of future results.
Taxation Rules On Sectoral Mutual Funds
Similar to thematic or equity MFs, sectoral MFs also follow the same taxation rules (LTCG and STCG).
- If units are sold within 12 months: Gains are taxed at 20% as Short-Term Capital Gains (STCG).
- For units held longer than 12 months: Gains up to ₹1.25 lakh are tax-exempt, and those exceeding ₹1.25 lakh are taxed at 12.5% LTCG.
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