Thematic Funds Explained: What are thematic funds? They can deliver returns higher than fixed deposits.
If you want to earn higher returns with lower risk and are looking for an investment option that is both safe and yields returns, thematic mutual funds can be an excellent option for you. These funds are based on a specific theme or trend and invest in companies across different industries.
What are Thematic Funds?
Thematic funds are mutual funds that invest in a specific theme—such as:
Green Energy
Technology
Infrastructure
Consumer Story
Healthcare, etc.
Features:
These funds are not limited to a single sector, but rather invest in multiple industries related to the theme. This:
Increases returns
Keeps risk largely under control
Why should you invest in thematic funds?
⭐ 1. Direct Participation in Trending Sectors
If a sector in the market is gaining momentum, you become directly involved in that trend.
⭐ 2. Portfolio Diversity
Money doesn't get stuck in one place. It's spread across multiple companies and industries—reducing risk.
⭐ 3. Expert Management
You don't need to time the market. Fund managers buy and sell for you at the right time.
⭐ 4. Potential for Higher Returns than FDs
If the theme works well, these funds can deliver higher returns than FDs or even regular funds over the long term.
How Much Return Do You Get?
Let's take an example:
ICICI Prudential Thematic Advantage Fund (FOF)
(Data: as of July 30, 2025)
| Period | Return |
|---|---|
| 1-Year Return | 8.23% |
| 3-Year CAGR | 20.68% |
| 5-Year CAGR | 26.08% |
This implies that during the previous few years, this fund might have produced large returns if you had invested sensibly.
What's the risk?
Yes, there is risk...
But not as much as people think.
Because:
The money is spread across multiple companies
Different industries are covered
The theme is strong
Therefore, the risk is largely manageable.
Who should invest in thematic funds?
Beginner investors
Those who want to earn more than FDs
Those with a goal of 3–5 years or more
Those who don't mind taking moderate risk
Conclusion
Thematic funds are great for those who want:
Their money to be safe
And also to experience strong growth over time
If you're looking for a new investment option, consider investing in a thematic fund with a plan, whil
e understanding market trends. Investing on the right theme can yield truly impressive returns
