Top 5 Sectoral Mutual Funds to Watch in 2026 (With Smart Investment Approach)

Investing in sectoral mutual funds can supercharge your portfolio – if done right. These funds focus on specific industries and come with higher risk but also higher reward potential. In 2026, with evolving market dynamics, here’s a breakdown of the top 5 sectoral themes and how you can balance them wisely.

Pharma & Healthcare: Riding on India’s Growing Medical Demand

The Indian healthcare sector continues to expand due to rising medical tourism, health insurance penetration, and government spending (Ayushman Bharat).

Top Fund Example: HDFC Pharma & Healthcare Fund

• Strong long-term CAGR (10Y CAGR ~15%)
• Defensive in market downturns
• Strong export potential with global demand
• R&D backed growth from Indian pharma majors
• Beneficiary of government healthcare policies
• Suitable for long-term risk-managed investing

Suggested SIP Allocation: ₹2,000/month

Banking & Financial Services: Backbone of Economic Growth

With India’s rapid formalization and credit growth, the BFSI sector continues to be a powerhouse.

Top Fund Example: SBI Banking and Financial Services Fund

• Exposure to leading private banks and NBFCs
• Profits from rising digital and retail lending
• Regulatory support (PSU consolidation, interest reforms)
• Inflation-hedged long-term returns
• High liquidity and stable NAV growth
• Great for core equity exposure

Suggested SIP Allocation: ₹2,000/month

EV & Automation: The Quiet Revolution Powering the Next Decade

The EV & Automation sector is moving from early adoption to mass penetration. The momentum behind this shift suggests permanence, shaped by long-term cost advantages, regulatory alignment, and efficiency gains.

Top Fund Example: SBI Automotive Opportunities Fund

• Play on India’s Growing Automotive Ecosystem
• Opportunity for Global Exposure
• Sector & Supply Chain Diversification Within Automobiles
• Backed by SBI – India’s Largest Mutual Fund House
• Strategic Vehicle for Long-Term Investors
• Thematic Focus on a High-Growth Industry

Suggested SIP Allocation: ₹2,000/month

Energy & Power: The Real Raw Material of AI & Growth

The fund aims to build long-term value by investing in industries positioned to gain from evolving global energy needs and transition dynamics.

Top Fund Example: DSP Natural Resources & NEW Energy Fund

• Exposure to energy, metals, mining, and new-energy businesses
• Direct play on global energy demand and energy transition
• Benefits from AI, data centers, EVs, and infrastructure growth
• Natural hedge against inflation and commodity price cycles
• Mix of traditional energy + renewable & clean-energy themes
• Opportunity to gain global exposure along with Indian companies

Suggested SIP Allocation: ₹1,500/month

Global Tech & Energy: The Real Growth Engines of the World

Invests in global leaders across technology, healthcare, finance, and consumer sectors.

Top Fund Example: Nippon India US Equity Opportunities Fund

• Direct access to one of the world’s most resilient and influential equity markets – the United States.
• Invests in global leaders across technology, healthcare, finance, and consumer sectors
• Participation in AI, cloud, semiconductors, and innovation-led growth
• Access to high-quality, high-margin global companies
• Helps diversify portfolio outside Indian markets
• Benefit from dollar appreciation against INR over the long term
• US companies have higher innovation, R&D spending, and pricing power

Suggested SIP Allocation: ₹1,500/month

How to Allocate Smartly in Sectoral Funds

Sectoral funds, unlike diversified funds, need a well-defined investment approach. Here’s a sample plan:

Sector	Suggested SIP	Risk Level	Ideal Horizon
Pharma	₹2,000	Moderate	5+ Years
BFSI	₹2,000	Moderate	5+ Years
EV & Automation	₹2,000	High	7+ Years
Energy & Power	₹1,500	High	3–5 Years
Global Tech & Energy	₹1,500	Low-Moderate	5+ Years

Total SIP: ₹10,000/month

Final Take: Balance Risk With Sectoral Edge

Instead of betting big on just one sector, spreading your SIPs across diverse themes reduces risk and captures multi-sectoral growth. The key is to:

• Avoid overexposure to high-risk sectors
• Invest through SIPs to average costs
• Stick with a 5–7 year horizon
• Review and rebalance once every year

🎯 Want to build your custom sectoral portfolio for 2026?

📩Connect with MunafaWaala – Add Profit to Your Life!