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How To Invest in Thematic Mutual Funds

Investing in stocks continues to become increasingly popular, as evidenced by the growth in investing and investors. From individual stocks to, ETFs and mutual funds, there exists an abundance of investments that you can employ to diversify your portfolio and minimise your risk. Mutual funds, are particularly popular, as they enable you to invest in a diverse set of securities and avail the services of a professional money manager, who controls the funds investments. One type of mutual fund is a thematic fund, or a thematic mutual fund. In this article, let’s take a look at thematic funds in India, what is thematic investing, and how you can invest in thematic mutual funds. 

  • What is a thematic fund

A thematic mutual fund for almost all practical purposes functions exactly as any other mutual fund does. You invest in the fund and based on your investment amount you are given a proportional piece of the pie. The fund is managed by the fund manager who makes investment decisions, and there exists a wide catalogue of various types of investment funds with a variety of investment goals, objectives and strategies. All of this is also accomplished by a thematic mutual fund. The factor that sets a thematic mutual fund apart, the investing strategy it follows. 

As the name suggests, a thematic mutual fund makes its investment decisions based on the theme that resides at its core. For instance, a thematic fund could be based on the theme of FMCG, and would subsequently make investments in companies that reside in the FMCG sector. These themes are not limited and are up to the fund and funds managers to decide, in order to attract like-minded investors to invest in their thematic fund. For instance, a company could offer a minimum variance thematic fund or a thematic mutual fund centred around transportation and logistics, or even a special situations fund. Currently, there also exist funds that offer an ethical thematic mutual fund that makes its investment decisions based on certain ethical values, while still maintaining profitability for the fund. Remember, thematic funds can also focus on securities other than equity and stocks, such as fixed income, like bonds. 

  • How to invest in thematic funds?

The process of investing in a thematic fund is fairly routine and the same as investing in any other mutual fund. You can, after having done your research on thematic funds and picked a fund of your choice, employ your DP/broker in order to invest in mutual fund, either through a lumpsum, investment or through a SIP. 

However, because Thematic funds are centred around a certain theme this can also mean higher risk, simply because of the focus on a particular set of stocks. While this means you can employ them if your fundamental analysis tells you a certain sector might boom soon, it also means it is a very specific investment that comes with risk. 


Online trading in thematic mutual funds is a good way to diversify your risk and invest in a specific sector or group when compared to individual investing in stocks. However, these funds when compared to other mutual funds also offer higher risk, and it is therefore recommended that you do your fair bit of research before investing in a thematic mutual fund through online trading.

Related Blogs: How to Analyse Mutual Funds for Big Returns | Things to Know Before Investing in Mutual Funds | Mutual Fund - Need of Financial Plan | How to Invest in ELSS Online | How to Invest in Mutual Funds With Motilal Oswal

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