Thematic and hybrid funds garnered higher inflows in Sept, financial advisors explain why

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₹16,000 crores through regular systematic investment plan (SIP) investments. Statistics also underscore more investors taking an active interest in thematic or sectoral funds owing to their competitive returns. Considering how investing in these funds involves a lot of risk, numbers suggest the growing risk-averse nature of investors amidst growing optimism regarding the performance of the Indian stock market.

A discussion with personal financial experts revealed possible reasons for growing interest in sectoral funds. Hiren Thakkar, Chartered Accountant Proprietor, Hiren S Thakkar & Associates said, “As per my understanding, investors are cautious and selective because we are trading at the top of the valuation channel. Therefore, investors have shown interest in the hybrid- Balanced advantage/multi-asset funds and sector-specific funds like – IT and Pharma." Viral Bhatt, Founder, Money Mantra added, “The Indian stock market has been performing well in recent months, with the Sensex and Nifty reaching new record highs in September.

This positive market sentiment has boosted investor confidence and led to increased inflows into mutual funds. It is important to note that thematic/sectoral and hybrid funds are more volatile than diversified equity funds. This is because they invest in a concentrated portfolio of stocks or sectors.

Therefore, investors should carefully consider their risk appetite and investment goals before investing in these funds." “Investors are rotating their funds into sectors and themes that are expected to perform well in the coming months. For example, sectors such as IT, banking, and financial services are expected to benefit from the strong economic growth in India. Similarly, themes such as