Thematic funds rise, but investor interest is fading

India’s mutual fund industry is facing a curious paradox, with asset managers doubling down on thematic and sectoral funds even as investors in new fund offers (NFOs) turn lukewarm towards them.

- Srushti Vaidya& Apoorva Ajith

Capital raised through thematic NFOs in the 12 months ended October 2025 plunged 52% from a year earlier, totalling around ₹33,712 crore, data from the Association of Mutual Funds of India showed. Further, the share of thematic and sectoral funds in overall NFO collections declined to 42% from 62% the previous year.

Yet, the pace of launches barely missed a beat -- mutual funds introduced 45 new thematic and sectoral NFOs in the 12 months to October 2025, virtually unchanged from the previous year's 44.