List of Top 10 Sectoral Mutual Funds in India to Invest in Online for 2024

Investors often seek diversification when building a portfolio of mutual funds. Diversifying across asset classes like equity, debt, real estate, and hybrid funds is a common strategy. Another effective method is diversifying across different economic sectors through sectoral mutual funds.

Sectoral mutual funds are open-ended equity schemes focused on specific sectors such as energy, infrastructure, healthcare, and utilities. These funds invest in companies with varying market capitalizations within a particular sector. They can offer significant returns when the sector performs well, allowing investors to leverage their market knowledge for potential profits. In this article, we’ll explore a list of the top sectoral mutual funds across different sectors and themes, based on their 5-year Compound Annual Growth Rate (CAGR).

List of Best Sectoral Mutual Funds in India (2024)

Here is a list of the top sectoral mutual funds based on their 5-year CAGR:

Fund Name	Sector	AUM (in Cr)	Absolute Returns-1Y	Expense Ratio	5Y CAGR
Quant Infrastructure Fund	Infrastructure	₹3,881.58	82.56%	0.66%	39.69%
Invesco India Infrastructure Fund	Infrastructure	₹1,470.26	87.42%	0.79%	34.15%
Bank of India Mfg & Infra Fund	Infrastructure	₹404.90	69.78%	0.94%	32.55%
Bandhan Infrastructure Fund	Infrastructure	₹1,342.96	92.43%	0.97%	31.96%
Nippon India Power & Infra Fund	Energy & Power	₹6,694.49	86.19%	1.12%	31.65%
Canara Rob Infrastructure Fund	Infrastructure	₹694.35	80.02%	1.07%	31.27%
ICICI Pru Infrastructure Fund	Infrastructure	₹5,034.14	70.44%	1.13%	31.14%
DSP Healthcare Fund	Pharma & Healthcare	₹2,363.39	47.59%	0.66%	31.01%
DSP India T.I.G.E.R Fund	Infrastructure	₹4,385.95	83.85%	1.05%	30.80%
LIC MF Infra Fund	Infrastructure	₹430.21	94.79%	1.45%	30.70%

Disclaimer: The above list is for educational purposes only and is not a recommendation. Please do your research or consult a financial advisor before investing.

Overview of the Top Sectoral Mutual Funds

Quant Infrastructure Fund

Quant Infrastructure Fund, managed by Vasav Sahgal and Ankit A Pande, is an equity mutual fund from Quant Mutual Fund. With an AUM of ₹3,881.58 crore and a NAV of ₹47.50, this fund has delivered an impressive 1-year return of 82.43% and a 3-year CAGR of 38.72%. The minimum SIP investment is ₹1,000.

Invesco India Infrastructure Fund

Managed by Amit Nigam, the Invesco India Infrastructure Fund is an equity mutual fund with an AUM of ₹1,470.26 crore and a NAV of ₹81.81. The fund has returned 84.91% over the last year and has a 3-year CAGR of 37.68%. The minimum SIP investment amount is ₹500.

Bank of India Mfg & Infra Fund

Bank of India Manufacturing & Infrastructure Fund, managed by Nitin Gosar, is an equity mutual fund with an AUM of ₹404.90 crore and a NAV of ₹66.62. The fund has delivered a 1-year return of 67.39% and a 3-year CAGR of 33.08%. Investors can start a SIP with a minimum investment of ₹1,000.

Bandhan Infrastructure Fund

Managed by Vishal Biraia, Bandhan Infrastructure Fund is an equity mutual fund with an AUM of ₹1,342.96 crore and a NAV of ₹65.02. Over the past year, the fund delivered a return of 91.19% and has a 3-year CAGR of 37.69%. The minimum SIP investment is ₹100.

Nippon India Power & Infra Fund

Nippon India Power & Infra Fund, managed by Sanjay Doshi, is an equity mutual fund with an AUM of ₹6,694.49 crore and a NAV of ₹406.76. The fund has delivered an 82.42% return over the past year and a 3-year CAGR of 40.88%. The minimum SIP investment amount is ₹100.

Canara Rob Infrastructure Fund

Managed by Shridatta Bhandwaldar and Vishal Mishra, Canara Robeco Infrastructure Fund is an equity mutual fund with an AUM of ₹694.35 crore and a NAV of ₹185.280. The fund has delivered a return of 77.93% over the past year and has a 3-year CAGR of 38.42%. The minimum SIP investment amount is ₹1,000.

ICICI Pru Infrastructure Fund

ICICI Prudential Infrastructure Fund, managed by Ihab Dalwai, is an equity mutual fund with an AUM of ₹5,034.14 crore and a NAV of ₹208.76. The fund has delivered a return of 69.04% over the past year and a 3-year CAGR of 41.03%. The minimum SIP investment amount is ₹100.

DSP Healthcare Fund

Managed by Chirag Dagli, DSP Healthcare Fund is an equity mutual fund with an AUM of ₹2,363.39 crore and a NAV of ₹38.27. The fund has delivered a 1-year return of 45.71% and a 3-year CAGR of 17.76%. The minimum SIP investment amount is ₹100.

DSP India T.I.G.E.R Fund

DSP India The Infrastructure Growth and Economic Reforms Fund, managed by Rohit Singhania and Charanjit Singh, is an equity mutual fund with an AUM of ₹4,385.95 crore and a NAV of ₹366.297. The fund has delivered an 80.08% return over the past year and a 3-year CAGR of 39.10%. The minimum SIP investment amount is ₹100.

LIC MF Infra Fund

The LIC MF Infrastructure Fund, managed by Yogesh Patil and Mahesh Bendre, is an equity mutual fund with an AUM of ₹430.21 crore and a NAV of ₹58.81. The fund has delivered a return of 80.08% over the past year and has a 3-year CAGR of 39.10%. The minimum SIP investment amount is ₹1,000.

Understanding Sectoral Mutual Funds

What are Sectoral Mutual Funds?

Sectoral mutual funds are equity schemes that focus on specific sectors of the economy, like utilities, energy, technology, healthcare, and infrastructure. They invest in companies’ stocks within these sectors, spanning different market capitalizations and security types. These funds enable investors to benefit from the top-performing stocks in chosen sectors.

By investing in businesses within the same industry, sectoral mutual funds provide exposure to specific segments of the economy. For example, sectors in India include technology, banking, pharma, auto, healthcare, and natural resources, each with the potential for medium to long-term growth and profitability. Investors can leverage sectoral mutual funds to capitalize on growth opportunities within these sectors.

How Do Sectoral Funds Work?

The Indian mutual fund landscape comprises various sectors, including IT, banking, pharma, chemicals, auto, and natural resources. Sectoral funds are designed to help investors capitalize on opportunities within these specific sectors. When a particular sector performs well, these funds can generate substantial returns, allowing investors to benefit from sectoral growth.

Sectoral funds invest in companies within a specific sector, such as pharma or technology. For example, a pharma sectoral fund might invest in pharmaceutical companies, healthcare facilities, and diagnostic labs. These funds diversify across large-cap, mid-cap, and small-cap companies within the chosen sector. SEBI regulations require sectoral funds to allocate at least 80% of their total assets to equity and equity-related instruments within the specified sector.

Types of Sectoral Mutual Funds

Here are the various types of sectoral mutual funds available in India:

Utility Funds: Focus on companies in the utility sector, offering stable dividends.
Natural Resources Funds: Invest in industries such as oil, natural gas, energy, forestry, and timber.
Technology Funds: Provide exposure to the technology sector, ideal for investors interested in technological innovations.
Financial Funds: Invest in companies from the financial industry, including banking, insurance, and accounting firms.
Communications Funds: Invest in the telecommunications sector and internet-related companies.
Healthcare Funds: Cover pharmaceutical companies, for-profit medical institutions, and biotechnology firms.
Precious Metals Funds: Offer exposure to precious metals like gold, platinum, silver, copper, and palladium.
Real Estate Funds: Invest in real estate developers and publicly traded REITs.
Energy Funds: Invest in the energy sector, including oil, gas, and alternative energy sources.

Key Features of Sectoral Mutual Funds

Sector-Focused Investment: These funds focus on specific sectors, providing an opportunity for potentially high returns when the sector performs well. Investors can target sectors poised for growth, such as technology or healthcare, aligning their investments with market trends.
Higher Risk: Sectoral funds come with a higher degree of risk due to their concentrated focus on a single sector. If the sector faces downturns, the fund’s performance may be adversely affected. However, for investors willing to take on higher risk, these funds can offer substantial rewards.
High Cost Structure: Sectoral funds often have higher expense ratios due to the need for specialized management and research. The funds require in-depth sector knowledge and expertise, which can lead to higher management costs. Investors should consider these costs when choosing sectoral funds.

Benefits of Investing in Sectoral Mutual Funds

Potential High Returns: Sectoral mutual funds allow investors to capitalize on the growth potential of specific sectors. For example, a technology sectoral fund can yield high returns during a tech boom. These funds enable investors to target sectors with promising growth prospects, enhancing their portfolio’s overall performance.
Professional Management: Sectoral mutual funds are managed by professionals with in-depth knowledge of the sectors they invest in. Fund managers conduct thorough research and analysis to select the best-performing stocks within the sector, ensuring investors benefit from their expertise.
Strategic Diversification: Although sectoral mutual funds focus on a single sector, they diversify within that sector by investing in companies of different sizes and market capitalizations. This approach allows investors to spread their risk across various companies within the sector, reducing the impact of any single company’s poor performance.

Risks Involved

Concentration Risk: Sectoral mutual funds carry a higher concentration risk due to their focus on a specific sector. If the sector faces challenges or downturns, the fund’s performance may suffer significantly. Investors should be aware of this risk and consider diversifying their portfolios across different sectors or asset classes.
Market Volatility: Sectoral funds are heavily influenced by sector-specific factors, making them more vulnerable to market volatility. For example, a healthcare sector fund may be impacted by changes in healthcare regulations or advancements in medical technology. Investors should be prepared for fluctuations in the fund’s performance due to these external factors.
Limited Diversification: While sectoral funds diversify within a sector, they lack broader market exposure, which can limit overall portfolio diversification. Investors may miss out on opportunities in other sectors if their portfolio is heavily weighted towards a single sectoral fund. It’s important to balance sectoral funds with other diversified investments to mitigate this risk.

Final Insight

Sectoral mutual funds provide a unique opportunity for investors to diversify their portfolios by focusing on specific economic sectors. While these funds offer the potential for high returns, they also come with higher risks due to their concentrated focus. Investors must carefully assess their risk tolerance and investment goals before investing in sectoral mutual funds. With the right strategy and sectoral knowledge, these funds can be a valuable addition to a well-rounded investment portfolio.