Thematic and sectoral funds lose steam as redemptions rise in manufacturing, quant, energy schemes

The Elara report also noted that the top 10 schemes accounted for nearly 50% of total active fund inflows in June. These were led by Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund, Motilal Oswal Midcap Fund, and Bandhan Small Cap Fund.

Interest in thematic and sectoral funds may be waning among domestic investors, with net inflow to these categories slowing to just Rs 470 crore in June, according to Elara Capital’s latest Domestic Liquidity Tracker report.

The report highlighted that manufacturing-themed funds saw an outflow for the seventh consecutive month, while Quant and Logistics funds faced fresh redemption pressure. Among sectoral categories, Energy funds recorded sharp outflow of Rs 740 crore in June, the highest monthly redemption in past four years, the report added.

Infra, Energy and Power - Steady redemption

In June, sectoral schemes focused on Infrastructure, Energy, Power, Global, and MNC themes saw net outflows, with thematic funds drawing only Rs 131 crore in inflow, lowest in the past year. In contrast, the highest inflow came into Pharma funds (Rs 795 crore), followed by Banking & Finance (Rs 271 crore) and IT (Rs 239 crore).

Despite monthly fluctuations, thematic funds have seen Rs 64,488 crore in net inflow over the last one year. Among sectoral funds, Energy-themed schemes led the annual inflow at Rs 21,008 crore, followed by Consumer funds with Rs 12,364 crore. Global funds, on the other hand, witnessed a net outflow of Rs 559 crore.

In the thematic category, Quant (Rs 221 crore), PSU (Rs 3 crore), Momentum (Rs 5 crore), and Manufacturing (Rs 578 crore) funds posted net outflow in June, marking the seventh straight month of redemption in Manufacturing funds, and the second consecutive month of outflow from Quant and Momentum strategies. Meanwhile, India Opportunity funds saw the highest inflow at Rs 673 crore, followed by Defence funds at Rs 162 crore.

Concentrated inflow in key schemes

The Elara report also noted that the top 10 schemes accounted for nearly 50% of total active fund inflow in June, led by Parag Parikh Flexi Cap Fund, HDFC Flexi Cap Fund, Motilal Oswal Midcap Fund, and Bandhan Small Cap Fund.

After hitting a 13-month low in May, total mutual fund inflow rebounded in June 2025 to Rs 23,500 crore from Rs 19,000 crore a month ago. The Flexi Cap category led the recovery, posting Rs 5,700 crore in inflow, highest since July 2021.

"Notably, 50% of the category’s one-year inflow have been concentrated in a single scheme—Parag Parikh Flexi Cap Fund—with a significant portion either held in cash or deployed in primary market issuances over the last two months. Midcap inflow have remained steady, though here too, the fund flow was concentrated with about 42% of incremental inflow over the past one year absorbed by the Motilal Oswal Midcap Fund," the report added.