Theme for a dream: Why thematic funds are gaining traction in the market

Beyond the obvious equity mutual fund winners this year, which have been mid and smallcap categories, thema­tic or sectoral funds have noticeably taken the lead. Data shows thematic equity mut­ual funds have amassed inflows worth Rs 22,871 crore as of October-end, higher than the Rs 18,855 crore gathered by the midcap category, and only second to the small-cap flows of  Rs 32,000 crore.

In contrast, the largecap category has witnes­sed net outflows of  Rs 2,894 crore in this period.

Thematic or sectoral mutual funds invest in stocks tied to a particular theme or sector. These schemes are