Invest in Best Sector Funds in India 2024
Discover the best Sector Funds in India for 2024. Learn who should invest, key benefits, risks, and find the top performing Sector funds.
What are Sector Mutual Funds?
Sector Mutual Funds are equity mutual funds that invest predominantly in a particular sector of the economy, such automobile, finance, energy and finance. The funds invest with the hope to capitalize on the sector growth and provide investors with the opportunity to earn big on the forthcoming years.
Who Should Invest in Sector Mutual Funds?
- Informed Investors: Individuals who have a deep understanding of specific sectors they are investing in, can opt to invest in this fund. You need to have a deeper understanding by conducting an extensive study about the sector before proceeding to invest
- Risk taking investors: Investors who have high risk appetite can invest in this fund. Unlike other funds where your investment gets diversified across several sectors, this fund invests in a particular sectors, so the risk is high, if that sector does not perform upto the expectations
- Diversified Industries Seekers: Investors who have high risk taking ability for exploring a businesses that are the bottom of cycle can make huge gains with sectoral funds
- Long-Term Investors: Individuals with a long-term investment horizon who can withstand sector volatility.
Top Performing Sector Funds
| Fund Name | Category | Risk | 6-Month Return | 1-Year Return | Rating | Fund Size (Cr.) |
|---|---|---|---|---|---|---|
| Sundaram Consumption Fund | Sector Mutual Funds | Very High | 15.46% | 32.90% | 5★ | ₹1,491 |
| DSP Natural Resources and New Energy Fund | Sector Mutual Funds | Very High | 27.19% | 54.30% | 5★ | ₹2,213 |
| Bank of India Manufacturing & Infrastructure | Sector Mutual Funds | Very High | 24.87% | 59.74% | 5★ | ₹404 |
| Invesco India Infrastructure | Sector Mutual Funds | Very High | 31.15% | 71.82% | 4★ | ₹1,470 |
| SBI Infrastructure Fund | Sector Mutual Funds | Very High | 22.85% | 62.05% | 4★ | ₹3,851 |
Factors to Consider While Investing in Sector Mutual Funds
- Sector Performance: Analyse the historical performance over the years which will give you valuable insights about the sector before proceeding to invest
- Economic Conditions: Understand how macroeconomic factors , geopolitical climate, and policy changes can impact the performance of your fund
- Investment Goals: If you really wish to make the most out of your investments, then you have to give an investment a timeline of atleast 5 years to grow to its fullest potential
- Inherent risk: These are concentrated funds which means it invests in one particular sector instead of diversifying your funds. Obviously, the risk in your portfolio increases.
Major Benefits of Sector Mutual Funds
- High Growth Potential: Potential for Significant returns by focussing on one particular sector
- Focused Investment: It gives investors a choice to focus on sectors which they think would perform in the current economic conditions
- Diversification: Despite the absence of direct diversification, if one chooses a particular sector, stocks from all related companies of that sector are held. Even if sectoral diversification is absent, each fund carries some kind of diversification
- Expert Management: Managed by professional fund managers with expertise in multiple sectors
- Long term goals: Sector funds require significant time period to reach their milestones. Those with long term goals can invest in these funds.
Risks Involved in Sector Mutual Funds
- High Volatility: Sector funds can be highly volatile and subject to significant price changes due to market conditions
- Concentration Risk: Investing in a single sector increases the risk that sector might undergo
- Economic Risk: Sector performance can be heavily impacted by geopolitics, economic conditions, and policy decisions
- Performance Risk: The fund’s performance is closely tied to the performance of the sector, which can be unpredictable.
Frequently Asked Questions (FAQs) about Sector Mutual Funds
1. What are Sector Mutual Funds?
Sector Mutual Funds are equity mutual funds that invest mainly in a particular sector of the economy, such as automobile, IT, FMCG, etc.
2. Who should invest in Sector Mutual Funds?
People who have sufficient knowledge about the market already, and people who know in depth details about the sector they have decided. In short, experienced campaigners have more chances to earn big than new comers
3. What are the benefits of investing in Sector Mutual Funds?
The benefits of investing in Sector funds include high growth potential, focused investment, and the ability to capitalize on sector cycles.
4. How do I choose the best Sector Mutual Fund?
Consider factors like historical performance, your risk tolerance, expense ratio, fund manager’s track record, and your investment goals before choosing the fund. You can seek the assistance of Fincover, whose MF experts would consider you pick the best Sector fund in the market
5. Are sector funds influenced by global events?
Yes, global events can influence the sectors especially when they are globally integrated like petrol. Oil and gas related stocks can undergo significant changes during unforeseen global events like war or any other catastrophe