How to pick sectoral and thematic funds: Key things you need to keep in mind while investing in mutual funds

Investing in mutual funds on the basis of past returns is not a good idea. This is especially true in case of sectoral and thematic funds. Sectors and themes tend to be cyclical in nature, and the performance depends on a host of factors, including news developments, economic conditions, global trends, government policies and market sentiments. For instance, the pharma sector was the top performer after the Covid outbreak in 2020, but it was the worst performer in 2021 and gave negative returns the next year Investors have poured nearly Rs.55,000 crore in these funds in the past six months. Find out if these schemes suit you.