Your Questions Answered: I want to invest in sectoral funds. Please elaborate what are manufacturing mutual funds?

livemint.com:

Shyam Prakash Jain, Ajmer, Rajasthan Before we understand what are manufacturing mutual funds we should first understand what are sectoral mutual funds. Sectoral mutual funds are a type of equity mutual fund that invests in a specific sector or industry of the economy, such as banking, technology, pharma, energy, etc. These funds aim to capitalise on the growth potential and opportunities of a particular sector by investing in the stocks of the companies belonging to that sector.

According to SEBI guidelines, sectoral mutual funds have to invest at least 80% of their assets in equity and equity-related instruments of a particular sector. They can invest in companies of different sizes, from large-cap to mid-cap to small-cap, as long as they belong to the same sector. The remaining 20% of their assets can be invested in other sectors, debt instruments, money market instruments, etc.

Manufacturing mutual funds are mutual funds that invest predominantly in companies engaged in the manufacturing sector. The manufacturing sector comprises industries that produce goods using raw materials, machinery, and labour. Some examples of manufacturing industries are automobiles, chemicals, textiles, metals, pharmaceuticals, and electronics.

Manufacturing mutual funds can offer exposure to a diverse range of companies that benefit from the growth of the Indian economy, domestic consumption, and export demand. Manufacturing is one of the key drivers of economic development and employment generation in India. Manufacturing mutual funds can also provide an opportunity to participate in the government's initiatives to boost the manufacturing sector, such as Make in India, Production Linked Incentive (PLI) scheme, and Atmanirbhar Bharat.