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Mutual funds that invest across numerous sectors are called thematic funds. These themes or sectors can include FMCG, textiles, durables, travel and leisure, technology, healthcare and pharma, banking and financial services, etc.<\/p>\n\n\n\n
Although these funds are known to provide excellent returns, picking a winning theme can be a task? Therefore, you must not be too eager to bite the bullet. In fact, before investing, be sure to consider the following factors. These tips can help you shortlist some of the top thematic mutual funds.<\/p>\n\n\n\n
Thematic funds are a type of equity fund that invests in stocks of companies centred around a specific theme. Unlike sector funds, which focus on a single industry, thematic funds cover multiple industries related to the chosen theme, providing broader diversification and reducing risk. These funds aim to capitalise on emerging opportunities by investing in sectors aligned with themes like manufacturing, innovation, real estate, transportation, and pharma. This allows investors to gain exposure to focused market areas that are expected to experience strong growth in the future.<\/p>\n\n\n\n
Experts state that you must have an investment horizon of at least 5 years when opting for thematic funds. Why? As a general rule of thumb, any theme or sector takes a significant amount of time to hit its peak. So, it may be a few years until you start collecting substantial returns.<\/p>\n\n\n\n
If you\u2019re looking for exponential growth, opt for a theme or sector that hasn\u2019t already hit its peak. This doesn’t mean you shouldn’t invest in popular sectors or themes like healthcare or technology. As a matter of fact, some of the best thematic funds to invest in 2022, like the Aditya Birla Sun Life Digital India Fund, come from this sector.<\/p>\n\n\n\n
But, along with investing in safe and popular themes, you can take a few chances with sectors like next-generation automobiles.<\/p>\n\n\n\n
Since thematic funds offer high returns potential, they are also high-risk investments. And this is why you must stay invested for an extended period of time in them. If you’re new to investing, experts recommend you diversify your portfolio in other types of debt and equity funds and invest a small chunk of your corpus in thematic funds. This is just till you learn the ropes.<\/p>\n\n\n\n
Know the expense ratio of your thematic fund, meaning the fee an Asset Management Company (AMC) charges for rolling out, managing, and marketing the fund. These fees are charged annually.<\/p>\n\n\n\n
It may be unideal to invest in a fund with a very high expense ratio, as you might lose a significant percentage of your earnings to the fund house. Therefore, check this amount before investing.<\/p>\n\n\n\n
You can either invest in thematic funds by paying a lump sum or depositing small amounts (as low as Rs. 500) every month through a Systematic Investment Plan<\/a> (SIP). The latter might work especially well for newbies who want to diversify their portfolio to indirectly include thematic funds.<\/p>\n\n\n\n Some benefits of investing in thematic funds include:<\/p>\n\n\n\n Adding multiple themes to your portfolio can help you mitigate risk since they increase diversification. <\/p>\n\n\n\n Thematic funds usually invest in multiple different companies across different sectors. This helps to increase diversification and spread risk. <\/p>\n\n\n\n Investors can buy or sell thematic funds at any time of the trading day, making them flexible. <\/p>\n\n\n\n Thematic funds are a great way to capitalize on growing sectors and industries.<\/p>\n\n\n\n If you’re looking to invest in them, turn to the Tata Moneyfy ‘s sip app<\/a> and website. Through our digital portal, you can compare and instantly invest in some of the top-rated theme-based funds. You can also try a lump sum investment by starting a SIP through us.<\/p>\n\n\n\nBenefits of Investing in Thematic Funds<\/strong><\/h2>\n\n\n\n
1. Reduce Risk <\/strong><\/h3>\n\n\n\n
2. Diversify Your Portfolio<\/strong><\/h3>\n\n\n\n
3. Increase Flexibility<\/strong><\/h3>\n\n\n\n
Before you go<\/strong><\/h3>\n\n\n\n