Four Consistent thematic Mutual Fund Performers

Published: August 15, 2019 at 11:48 am

Last Updated on

Here are four thematic mutual funds that have consistently outperformed the Nifty 100 Index and Nifty Large Midcap 250 index (dividends included) over every possible 1,2,3,4,5 year periods since inception.  The SEBI categorization rules have clubbed fund that invests in a particular sector or particular theme in the same category “sectoral/thematic”. For the purpose of this post, we shall refer to them as thematic funds.

Before we begin, are you working with a fee-only financial planner from my list? If yes, can you please fill this feedback form? Please help if you are working with a fee-only financial advisor. We have already received 390 responses. I am hoping we can make it close to 500 before I present the results to the planners. I shall also share them here.

Best thematic Mutual Funds in 2019Who should invest in thematic mutual funds?

A thematic or sectoral fund is by construction more volatile than a diversified equity mutual fund (even small cap funds) so only those who have a clear plan and know what they are doing should opt for these. While in general, I do not recommend these, there are some ways

  1. Building a Diversified Equity Portfolio with Sector Mutual Funds. Here your equity portfolio has only 3-4 thematic funds. The diversification is guaranteed and your focus it is the overall equity portfolio return and not individual thematic fund return. This will take a lot of conviction to carry out.
  2. Use it as a satellite portfolio. Your core equity portfolio has, say two diversified funds (one large cap, one mid cap) and you wish to add a thematic fund as a satellite. Maybe 5%-20% exposure. Too small an exposure may not make a difference to your portfolio, but if it makes you happy go ahead. However, periodic rebalancing is crucial. That is, if the thematic fund falls, you shift some gains from your core equity folio. If your thematic fund gains, you shift some gains to your core equity folio.
  3. Use it part of your core portfolio (A). Some funds (and this is a pretty short list) like MNC funds or ESG funds could be used as a replacement for a large cap or large and mid cap funds by well-informed investors. See for example: Can I invest in MNC Funds? Review: UTI MNC Fund vs ABSL MNC Fund
  4. Use it part of your core portfolio (B) If you understand a sector or theme well (or have more information about it than the general public, maybe because you are a subject expert or access to those), but not interested in picking individual stocks (probably a better, less expensive option), can consider thematic/sectoral funds. However, the basics of portfolio management will still apply!

How were the four thematic mutual funds selected?

Using the Aug 2019 Equity Mutual Fund Performance Screener, we compare 78 thematic funds with Nifty LargeMidcap 250. We then ask, how many of these funds have beat the index at least 70% of every possible 3,4 and 5-year durations.  The answer is 14 (just 18%).  We shall refer to this as return outperformance.

Then we ask, out of these 14 funds, how many tend to fall lower than the index when the index falls over 3,4,5 year periods.  The answer is 6 (about half). We shall refer to this as risk outperformance.

Next, we look at the 1 and 2 year periods and filter out funds that have less than 60% risk and return outperformance. So two funds drop and we are left with four.

Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

Disclaimer: Readers interested in the following funds are advised to read the individual fund scheme documents, understand the nature of the scheme and its risks. I do not hold any positions in any of these funds.

Franklin Build India Fund – Direct Growth
Aditya Birla Sun Life India Gennext Fund – Growth – Direct Plan
Mirae Asset Great Consumer Fund – Direct Plan Growth

The first is an infra fund. The next two are FMCG funds and the last is a PSU fund (surprised?!)

Four additional thematic funds that have beat Nifty 100 TRI

Now, the above analysis was repeated with Nifty 100 TRI and in addition to the above funds,   the following four funds have also done well.

ICICI Prudential FMCG Fund – Direct Plan –  Growth
Sundaram Rural and Consumption Fund – Direct Plan – Growth Option
Canara Robeco Consumer Trends Fund – Direct Plan – Growth
DSP  Natural Resources and New Energy Fund – Direct Plan – Growth

Just to reiterate, Franklin Build India Fund, Aditya Birla Sun Life India Gennext Fund,
Mirae Asset Great Consumer Fund, SBI PSU Fund have outperformed both Nifty LargeMidcap 250 TRI and Nifty 100 TRI as per the above-mentioned norms.

Finally, let me explain why the above benchmarks were chosen and not the individual sectoral benchmarks. As an analyst, sectoral benchmarks make sense. As an investor, I need to know if the additional risk I take in investing in a thematic fund is worth. Hence the decision to use a large cap index (Nifty 100 TRI) and 50% large cap + 50% mid cap index (Nifty large mid cap 250 TRI).

Get the Equity Mutual Fund Performance Screener to make your full analysis over all the mutual fund categories.

What are your views on these funds? Do you invest and/or track thematic comments? Tweet your views to @freefincal

Do share if you found this useful
Hate ads but would like to support the site? Subscribe to our ad-free newsletter and get beautifully formatted full articles delivered to your inbox!

About the Author

Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice.
He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association. For speaking engagements write to pattu [at] freefincal [dot] com

About freefincal & its content policy

Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. We operate in a non-profit manner. All revenue is used only for expenses and for the future growth of the site. Follow us on Google News
Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any kind of paid articles, promotions or PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)

Connect with us on social media

Our Publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingThis book is meant to help you ask the right questions, seek the right answers and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.

Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want

Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at low cost! Get it or gift it to a young earner

Your Ultimate Guide to Travel


This is a deep dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when traveling, how traveling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)  

Free Apps for your Android Phone

Comment Policy

Your thoughts are the driving force behind our work. We welcome criticism and differing opinions.Please do not include hyperlinks or email ids in the comment body. Such comments will be moderated and I reserve the right to delete the entire comment or remove the links before approving them.

1 Comment

  1. Hi, I have been investing in ABSL India Next Gen fund for over 5years. The fund cannot be classified as a pure FMCG fund instead has banks, financial services, automotive and fmcg stocks among its top holdings.
    Overall I have observed this to be a good alternative to a large cap fund.

Leave a Reply

Your email address will not be published. Required fields are marked *