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Sectoral Mutual Funds: Meaning, Objectives, Risk


Sectoral Mutual Funds: Meaning, Objectives, Risk, Find Complete details regarding Sectoral Mutual Funds, In this article we provide everything you want to know about Sectoral Mutual Funds like – Meaning of Sectoral Mutual Funds, Objectives of Sectoral Mutual Funds, list of best performing sectoral mutual funds in recent times etc. Now you can scroll down below and check more details for “Sectoral Mutual Funds: Meaning, Objectives, Risk”

Sectoral Mutual Funds: Meaning, Objectives, Risk

Meaning of Sectoral Mutual Funds

Sectoral Mutual Funds are the ones where the fund amount will be invested in the companies of specific industries depends on the sector it belongs to. To say in one word these are sector specific investments where the amount procured through issue of units will be invested in a specific industry.

Must Read – Best Mutual Funds to invest in 2016

For example there are numerous sectors in the industry as

  1. Pharma
  2. FMCG
  3. Banking
  4. Power
  5. Tele communications
  6. Information technology
  7. Infrastructure
  8. Education
  9. Manufacturing
  10. Insurance


If the amount procured by issuing mutual funds units is used solely for investing in the enterprise belonging to FMCG then it can be said as FMCG sector fund.

Must Read – How to choose a right mutual fund scheme

Objective of the sectoral Funds:

Main objective of these funds is to generate higher returns to the investors by investing in those sectors which are performing well. If the performance of banking sector in a country is very well then the demand for banking sectoral mutual funds will increase and vice versa.

Every result is extreme:

Since the funds are invested in the companies belonging to a specific industry the chances and the volume of gain or loss id high. For example if the IT sector is on bhoom then the gain that the investors of these It sectoral funds will be benefited much. On the other side if there is continuous lacking in the performance of an industry then those sectoral funds will results in heavy losses to the investors. So these funds are extremely volatile compared to the diversified funds in the market.

Must Read – Mutual Funds: Risk and return

High Risk:

These funds are sector specific, so it is very difficult to predict which sector is going to perform well in the coming future. They come with extreme results either gain or loss. So these funds are suitable for those who are ready to bear the losses.

Requires more experience & research:

For choosing a sectors mutual fund it requires to have a good knowledge about the performance of various industries. And the ability to assess the impact of an incident on various sector is also very important. Investing in right sector at right time is very important to avoid losses. More over if you incur losses they cannot be compensated by the same fund except in the long run. So it is required to research well before investing any sector funds.

Must Read – Mutual funds – Pros and Cons

 Following are the best performing sectoral mutual funds in recent times:

  1. Banking – SBI Banking & Financial services fund
  2. Energy & power – UTI Energy fund
  3. FMCG – SBI fmcg fund
  4. Infrastructure – SBI Infrastructure fund
  5. Media and entertainment – Reliance media & entertainment fund
  6. Pharma & Health care – SBI Pharma fund
  7. Service Sector – ICICI prudential exports and other services fund
  8. IT – SBI IT fund

Sectoral Mutual Funds - Meaning, Objectives, Risk

If you have skill and expertise to predict the future of different sectors in the industry and ready to bear the high risk associated with these funds then it is better to invest in these funds. Otherwise, the beginners are not advisable to start with these except in case of backed by strong financial advisers.

Must Read – Types or Classification of Mutual Funds


Mutual funds are subject to market risks. The information provided above is my personal opinion. This cannot be taken as endorsement of any fund or any financial decision. Investors are advised to verify all the scheme related details before choosing any fund.

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