Contents
- Various categories of Sectoral Funds in India
- Advantages of Sectoral Funds
- Disadvantages of Sectoral Funds
- Best Sectoral Funds
- Best Sectoral Funds 2019 – Details
- Aditya Birla Sun Life India GenNext Fund
- ICICI Prudential Banking and Financial Services Fund
- Mirae Asset Great Consumer Fund
- Franklin Build India Fund
- Tata Digital India Fund
- Conclusion
Sectoral mutual funds invest in specific sectors or themes that are recommended to highly informed investors. Mutual Funds schemes are well known for going through highly-rewarding phases, followed by lengthy rough patches.
Sector funds are those funds that primarily invest money in stocks of companies that operate in a particular sector. Given the limit to just one or two sectors, the risk quotient of this kind of fund is high as compared to other traditional mutual funds.
Various categories of Sectoral Funds in India
The below table provides the major categories of sectoral funds and their returns.
| S.No | Sector | 1 Year % | 3 Year % | 5 Year % |
|---|---|---|---|---|
| 1 | Banking and Finance Fund | 14.80% | 6.90% | 8.70% |
| 2 | FMCG | 28.30% | 11.80% | 17.40% |
| 3 | Infrastructure | 21.60% | 11.40% | 17.70% |
| 4 | Pharma and Healthcare | -4.30% | 0.10% | 11.30% |
| 5 | Technology | 25.70% | 4.60% | 14.40% |
Advantages of Sectoral Funds
- High returns if chosen correctly.
- These funds hold stocks across all market within that sector
- With sectoral funds, one could also diversify his mutual fund portfolio by allocating % for each sector and buying sectoral funds accordingly across various sectors.
Disadvantages of Sectoral Funds
- Highly unstable than diversified equity
- A wrong sector can heavily affect the portfolio returns.
- Need more knowledge on markets and macroeconomic situation.
Best Sectoral Funds
| Fund Name | 1 Year | 3 Year | 5 Year | Expense Ratio | NAV | Category |
|---|---|---|---|---|---|---|
| Aditya Birla Sun Life India GenNext Fund | 2.1% | 11.53% | 15.46% | 2.59% | ₹82.07 | Equity(Sectoral/Thematic) |
| ICICI Prudential Banking and Finance Services | 14.11% | 17.14% | 18.12% | 2.19% | ₹67.45 | Equity(Sectoral/Thematic) |
| Mirae Asset Great Consumer Fund | 0.49% | 13.85% | 14.1% | 2.38% | ₹33.64 | Equity(Sectoral/Thematic) |
| Franklin Build India Fund | 8.57% | 10.25% | 15.97% | 2.27% | ₹42.20 | Equity(Sectoral/Thematic) |
| Tata Digital India Fund | 2.22% | 13.18% | NA | 2.67% | ₹14.67 | Equity(Sectoral/Thematic) |
Best Sectoral Funds 2019 – Details
Aditya Birla Sun Life India GenNext Fund
Launched on 05-Aug-2005, this fund has given remarkable returns since its launch and caters to investment in themes and companies that have huge potential to grow by having a hold on India’s growth story.
| Launch Date | 05-Aug-2005 |
|---|---|
| NAV | ₹82.07 |
| Ratings by WealthBucket | 4 Star |
| AUM | ₹1090 Cr |
| Risk | High |
| Performance w.r.t. its Benchmark | Consistently beaten its benchmark NIFTY 500 TRI since its launch |
| Expense Ratio | 2.59% |
| Exit Load | If the withdrawal takes place between 0 to 1 year, then the exit load is 1% |
| Fund Manager | Anil Shah, Chanchal Khandelwal |
Investment Objective
The prime objective of this fund is to generate capital by investing in equity mutual funds and equity-related securities of companies that are expected to benefit from the rising consumption patterns in India, which has gained a high disposable income due to the young generation.
Holding Analysis
Because of the pace of the economy as well as the rising disposable income of the next generation, this fund has huge potential for growth in the coming future.
The top holdings of this fund are HDFC Bank Ltd., ICICI Bank Ltd., ITC Ltd., Maruti Suzuki Ltd., and PVR Ltd.
ICICI Prudential Banking and Financial Services Fund
Launched on 22-Aug-2008, this fund invests primarily in banking and financial service stocks. At the same time, it has generated a lot of wealth for its investors.
| Launch Date | 22-Aug-2008 |
|---|---|
| NAV | ₹67.45 |
| Ratings by WealthBucket | 5 Star |
| AUM | ₹3353 Cr |
| Risk | High |
| Performance w.r.t. its Benchmark | Has beaten its benchmark NIFTY Financial Services TRI long periods |
| Expense Ratio | 2.19% |
| Exit Load | If the withdrawal takes place between 0 to 1 year, then the exit load is 1% |
| Fund Manager | Roshan Chutkey |
Investment Objective
This fund aims to generate long-term capital appreciation by investing in equity funds and equity-related securities of companies in the banking and financial service industry.
Holding Analysis
The fund has given exceptional returns and further invests mostly in private sector banks.
Some of its top holdings are HDFC Bank, Kotak Mahindra Bank, ICICI Bank, Federal Bank, Karur Vysya Bank, etc.
It also invests in some major NBFCs like Bajaj Finserv, Muthoot Finance, M&M Financial Services, etc which have performed tremendously in the last few years.
Also, for an economy such as that of India, it becomes necessary for financial institutions to perform to fuel the growth in the economy. Therefore, investors who invest in this fund for the long-term are sure to benefit.
Mirae Asset Great Consumer Fund
This fund was launched on 29-Mar-2011 and has an AUM corpus of approximately ₹802 Cr.
As the name suggests, this fund bets on the consumer sector in India which has still a huge potential left. Let us look at the details now.
| Launch Date | 29-Mar-2011 |
|---|---|
| NAV | ₹36.5 |
| Ratings by WealthBucket | 3 Star |
| AUM | ₹802 Cr |
| Risk | High |
| Performance w.r.t. its Benchmark | Has consistently beaten its benchmark NIFTY 200 TRI since its launch |
| Expense Ratio | 2.38% |
| Exit Load | If the withdrawal takes place between 0 to 1 year, then the exit load is 1% |
| Fund Manager | Bharti Sawant, Ankit Jain |
Investment Objective
Given the solid growth potential for consumption-led demand in countries such as India and China, this fund seeks to generate long-term capital appreciation by primarily investing in equity and equity-related securities of consumption stocks.
Holding Analysis
Mainly betting on stocks of consumer goods, its top holdings are, ITC Ltd., Dabur India Ltd., Nestle India, Havells India, Colgate Palmolive, etc.
It also invests in a few other sectors such as financial services and automobiles. This fund has a huge way to go in the coming future because of the rising disposable income of the people in India.
Franklin Build India Fund
Launched on 04-Sep-2009, this fund invests in a variety of sectors such as financial services; energy, cement, cement products, etc.
Taking into account the sectors that are, it will be instrumental in providing growth to the Indian economy.
| Launch Date | 04-Sep-2009 |
|---|---|
| NAV | ₹42.40 |
| Ratings by WealthBucket | 5 Star |
| AUM | ₹1298 Cr |
| Risk | High |
| Performance w.r.t. its Benchmark | Has beaten its benchmark NIFTY Infrastructure TRI consistently |
| Expense Ratio | 2.23% |
| Exit Load | If the withdrawal takes place between 0 to 1 year, then the exit load is 1% |
| Fund Manager | Anand Radhakrishnan, Roshi Jain, Srikesh Nair |
Investment Objective
The scheme seeks to generate capital appreciation in equity and equity-related securities engaged directly and indirectly in infrastructure-related activities.
Holding Analysis
With a low expense ratio, lower fund size, market-beating returns, and holdings in top companies, this fund is very good for long-term investors
Tata Digital India Fund
Launched in 28-Dec-2015, this fund has provided decent returns by investing in companies in the pharma sector.
| Launch Date | 28-Dec-2015 |
|---|---|
| NAV | ₹15.16 |
| Ratings by WealthBucket | 1 Star |
| AUM | ₹428 Cr |
| Risk | High |
| Performance w.r.t. its Benchmark | Has beaten the peer group companies in the industry over different periods. |
| Expense Ratio | 2.57% |
| Exit Load | If the withdrawal takes place between 0 to 3 months, then the exit load is 0.25% |
| Fund Manager | Danesh Mistry |
Investment Objective
The fund aims for capital appreciation through investments in the stocks of the companies engaged in the transportation and technological sector.
Holding Analysis
The fund has given brilliant returns in three years and its top holdings are Infosys Ltd, Tata Consultancy Services Ltd, Tech Mahindra Ltd, HCL Technologies Ltd, Repo, Wipro Ltd.
Conclusion
Sectoral funds are funds that are meant for active educated investors who often analyze the macroeconomic situation of sectors. So when an educated investor feels that this sector would give good returns in the future for the next couple of years then buying sectoral funds would help them in beating the diversified fund returns.
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These funds have been shortlisted by undertaking certain parameters like AUM, NAV, past performances, peer average returns, etc. All the data is updated and is dated 9 July 2019.
