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Ch.2 · Mutual Fund Structure Basics · medium

What is a Sectoral or Thematic fund?

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EXPLANATION

A Sectoral/Thematic fund must invest minimum 80% of assets in a specific sector (e.g., banking, pharma, IT) or theme (e.g., ESG, consumption). These funds carry higher concentration risk than diversified equity funds since they are not sector-agnostic.

A.A fund that invests across all sectors to maximise diversification

B.A fund that invests minimum 80% in a specific sector or theme such as banking, IT, or infrastructure [✓ Correct]

C.A fund that invests in international stocks of a specific theme

D.A fund that invests in dividend-paying stocks across all sectors

EXPLANATION

A Sectoral/Thematic fund must invest minimum 80% of assets in a specific sector (e.g., banking, pharma, IT) or theme (e.g., ESG, consumption). These funds carry higher concentration risk than diversified equity funds since they are not sector-agnostic.

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