Before investing in a mutual fund scheme, it is recommended to examine the past returns of similar schemes in the same category.
Although historical returns do not guarantee future returns, they indicate the trajectory of growth of one scheme relative to others. Here, we list out the past returns of sectoral/ thematic funds in the past five years.
Sectoral funds
Those who are not aware, sectoral funds are those that invest in a particular sector of the economy, such as infrastructure, banking, technology, and pharmaceuticals. Since these funds focus on one sector of the economy, they limit diversification and are riskier.
Thematic funds select stocks of companies in industries that belong to a particular theme, such as service industries, PSUs, or MNCs. They are more diversified than sectoral funds and have lower risk than sectoral funds.
As shown in the table above, the Quant Infrastructure Fund delivered a 37.34 percent annualised return, while the ICICI Prudential Infrastructure Fund achieved a 36.74 percent annualised return.
Bandhan Infrastructure Fund gave a 34.07 percent annualised return, and DSP India TIGER Fund gave a 33.05 percent annualised return.
Meanwhile, it is worth mentioning that past returns do not guarantee future returns. In other words, just because a scheme has delivered good returns in the past, it does not mean it will continue to give exceptional returns in the future as well.
Therefore, investors must examine some other factors as well before choosing a mutual fund scheme to invest in. These criteria include past performance of the fund manager, reputation of the fund house, category of scheme, and overall macro-economic scenario, among other indicators.
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