Four Consistent thematic Mutual Fund Performers

Published: August 15, 2019 at 11:48 am

Last Updated on August 30, 2021

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.

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

Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 640 investors and advisors use this!
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 2525 investors and advisors are part of our exclusive Facebook Group! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 585 salaried employees, entrepreneurs and financial advisors are part of our exclusive Facebook Group! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos in an exclusive Facebook Group!   
My new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, if we had to groom one ability in our children that is key not only to money management and investing but for any aspect of life, what would it be? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parent’s plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Did you know? We have more than 1000+ videos on YouTube to explore! Join our YouTube Community!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
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 three print books, You can be rich too with goal-based investing (CNBC TV18), Gamechanger, Chinchu Gets a Superpower! and seven other free e-books on various money management topics. 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 based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni 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. Follow us on Google News. Freefincal serves more than three million readers a year (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 paid articles, promotions, 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 investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the correct 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 a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling 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 android apps