Thematic Fund — Mutual Fund Term Explained

An equity fund focused on a theme across sectors — like ESG, digital transformation, consumption or manufacturing. Higher concentration risk.

Thematic funds invest across sectors in companies linked by a common theme — ESG, digital India, consumption, infrastructure, etc. Unlike sectoral funds (single sector), thematic funds can hold companies from multiple sectors.

Thematic funds carry higher concentration risk and require investors who understand the theme well.

Related terms

• Sectoral Fund — An equity fund investing at least 80% in a single sector — banking, pharma, IT, etc. High concentration risk and cyclical performance.
• Equity Fund — A mutual fund investing primarily (≥65%) in stocks. Highest long-term return potential but highest short-term volatility.
• Concentration Risk — Risk from over-exposure to a single stock, sector or theme. High concentration amplifies both gains and losses.

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