Mutual Funds Mastery Part 3

Welcome to the part 3 of the series

Mutual Funds mastery Part 3 is going to be more advance learning in this part, we are going to discuss the sectoral and thematic funds. So let’s begin

SECTORAL FUNDS :-

Mutual Fund Industry provides a wide variety of products for the investors and they are diversified in nature which gives us the advantage of of being diversified in a few amount of capital; but Mutual Funds are having a concentrated nature of investments as well .In this type of fund the whole invested capital is allocated in a particular sector . The money gets invested in different companies of the same sector . This type of funds aims at a particular sector so it comes under the category of HIGH RISK AND HIGH REWARD investments .

For this type of investment one need to study and examine the particular sector before investing and it include both the analysis (i.e. Fundamental and Technical analysis of a particular sector in which you are interested to make the investments ). Also the study of the economy of particular sector is essential. I suggest you to go through the part 1 and part 2 as well before looking forward with part 3 so as to go through the basics.

PARAMETERS OF ANALYSIS

MAJOR EVENTS

First of all we should be aware regarding the decisions made by the government (ex. Union Budget 2024, the Indian government allocated ₹6.21 lakh crore to the Ministry of Defence, marking a 4.72% increase from the previous fiscal year and this was the sector which got huge funds from the government ).The new index Nifty India Defence Index was introduced in 2024 also the defence stocks were showing massive strength in the markets after this decision was proposed .

The fund managers saw it as a new Asset Class for the Investors and several fund managers made a new fund named as Defence funds and are as follows

HDFC Defence Fund – ₹4,975.51 Cr AUM

Motilal Oswal Nifty India Defence Index Fund – ₹2,875.46 Cr AUM

Aditya Birla Sun Life Nifty India Defence Index Fund – ₹391.11 Cr AUM

Groww Nifty India Defence ETF FoF Fund – ₹34.12 Cr AUM

If we compare all these funds then the HDFC Defence Fund was the winner fund of year 2024 . The fund was launched on May 19, 2023. Gain the confidence of investors in less time, the AUM showed above are of latest records of the may 2025 . The HDFC Defence Fund has shown a trailing return of 59.3% over 2 years. 

It’s important to note that this fund has also demonstrated a 1-year return of 11.24% and a 1-month return of 18.77% as of June 1, 2025. If we observe that the HDFC’s Fund Manager was the first one to introduce this defence theme before the union budget 2024. In this Market the one who takes the decision fast is the winner of the future . The Fund Manager saw that the defence stocks as follows

Bharat Dynamics Ltd.

Zen Technologies Ltd.

Hindustan Aeronautics Ltd. (HAL)

Bharat Electronics Ltd. (BEL)

Paras Defence and Space Technologies Ltd.

Apollo Micro Systems Ltd.

Garden Reach Shipbuilders & Engineers Ltd.

Mazagon Dock Shipbuilders Ltd.

Cochin Shipyard Ltd.

MTAR Technologies Ltd.

Data Patterns (India) Ltd.

Astra Microwave Products Ltd.

Were performing far well and so to introduce this kind of MUTUAL FUND was proved to be the right decision for HDFC as government also promoted this sector .

TECHNICAL ANALYSIS

In this scenario what the common persons like us , make the decisions .Here would be using the charts. We need to understand the language of charts ; because charts tell you first then the Fundamentals show you the direction which is same as that of technical.This kind of analysis is also important in analysing the SECTORAL MUTUAL FUNDS.

As we can see the BEL stock is showing momentum since the MARCH 2023 and later all the decisions were made by the government so the chart is your friend. The indicators in the image are (RSI, RS BHARAT TRADER, REVENUE GROWTH) We shall discuss these indicators in upcoming posts, but now just consider that the chart is GREEN since MARCH 2023 so it is showing strength.

ANOTHER EX.

SAME HERE THE HAL STOCK

This was also showing the momentum since FEB 2023 and a strong bull for a long time. When we see that the multiple stocks from the same sector are bullish for a long time then this sector is to perform well in the future as well this is known as SECTOR ANALYSIS .So this sector is quite good for investment and after the government’s decision the strength was there for a long duration and so by doing this analysis one can make investments in the SECTORAL FUNDS AS WELL. From this we come to know that the chart speaks first then the events happens .

THEMATIC FUNDS

This mutual funds belonging to the specific theme and the theme could be the particular sector or the mixture of mulitple sectors .

Focused Investment: These funds concentrate on a particular theme, such as technology, healthcare, or renewable energy.

Higher Risk & Reward: Since they depend on the success of a specific theme, they can be more volatile compared to diversified funds.

Best for Aggressive Investors: Suitable for those who strongly believe in the potential of a particular sector but should ideally not exceed 10% of a portfolio.

Performance Variability: Returns are tied to the theme playing out successfully, making them riskier than general equity funds .

Thematic Funds May have the combination of multiple sectors as

Here are some thematic mutual funds that invest across multiple sectors:

• ICICI Prudential Exports and Services Fund – Focuses on exports, IT, and manufacturing
• SBI Magnum COMMA Fund – Invests in commodities, metals, and mining
• Aditya Birla Sun Life Conglomerate Fund – Covers diverse industries like finance, infrastructure, and manufacturing
• Axis Innovation Fund – Targets technology, healthcare, and digital transformation
• UTI Transportation and Logistics Fund – Includes automobile, aviation, and shipping sectors

These funds provide diversified exposure to multiple industries under a single theme, reducing risk compared to sectoral funds.

So here the process of analysis is same as that of the above described example of defence sector fund , only the thing is that wa should analyse the risks carefully and invest that much amount which we didin’t require today and thing of long term view [Atleast for the 5 years] and accordingly make the investments.So now we come to know that Mutual Funds are a kind of product where we can invests from a small amount as low as (100 rupees)which might not be sufficient for buying the strong stock of a sector as well . So , there is always a demand in the Mutual Fund industry, and the AMC ARE HAVING GREAT potential for growth in the coming tenure.

So this was from my side see you in the next content till then

STAY HUNGRY STAY BULLISH