Decoding Sectoral vs Thematic Funds

In your previous edition, the article highlighted the importance of sectoral and thematic funds in a portfolio. But my question is simple, which is better, sectoral or thematic mutual funds? - Nandan Patel

Editor Responds : Whether sectoral or thematic mutual funds are better depends on your individual investment goals and risk tolerance. Sectoral mutual funds invest in a specific sector or industry, such as technology, healthcare, or finance. They are more concentrated than diversified equity funds. They also have the potential to generate higher returns, if the sector they are invested in outperforms the market. On the other hand, thematic mutual funds invest in companies that are related to a specific theme or trend, such as artificial intelligence, renewable energy, or e-commerce. They are more diversified than sectoral funds, but are still more concentrated than diversified equity funds and can be more volatile. If you are unsure which type of fund is right for you, it is a good idea to consult with a financial advisor. They can help you assess your investment goals, risk tolerance, and time horizon, and they can recommend the right type of mutual fund for you. Happy investing