Sebi’s categorisation rules, which allow mutual fund houses or asset management companies (AMCs) to have only one fund per category, have restricted the launch of diversified funds. As a result, AMCs have shifted their focus towards launching more sectoral and thematic funds. The market rally has further added to this trend, with more of these funds being launched, thereby leading to increased inflows into sectoral and thematic schemes. “The market has also witnessed a surge in new fund offers (NFOs), especially sectoral and thematic funds. This trend emerged partly because SEBI’s categorisation, which allows only one fund per category for Asset Management Companies (AMCs), limited the scope for launching more diversified products. As markets rallied, more such funds were launched, further driving inflows into these products,” said Rajesh Minocha, a Certified Financial Planner (CFP) and founder of Financial Radiance. The sectoral and thematic mutual funds have received an inflow of around Rs 96,489 crore in FY25 so far (till September 30, 2024) with highest inflow in June of Rs 22,351 crore. Among all equity mutual fund categories, sectoral and thematic funds have continued to receive highest inflows for six straight months. (Source: ACE MF)