A thematic fund is one where the fund�s objective is to deliver optimal returns by investing in stocks which qualify to belong within the particular theme that is considered � the theme could vary from multi-sector, international exposure, commodity exposure etc., unlike a sector fund, theme funds have a broader spectrum to operate in. Theme based funds are often mistaken to be sector funds. Although one could draw some broad comparisons, the scope of a theme fund is typically wider.
Nuances of Thematic funds As stated earlier, they have a broader spectrum when compared to sector funds, but is limited when compared to Diversified equity mutual funds. Thematic funds by nature are more prone to risk and volatility. The performance of these funds is dependent on the performance of a particular set sector or a theme, unlike a diversified fund which moves in line with the broader markets. Thematic funds could have themes ranging from Multi-Sector, International / Multi - Economy, Commodity, particular style of investing etc. Thematic funds are suited for investors who are well versed with market trends and are hence in a better position to take thematic calls. Past Performance Below is a table illustrating how some of the thematic funds have fared in the past, they may not be comparable head-to-head and it may be unfair to assess them against a benchmark. Thematic funds tend to perform based on their own individual cycle. There are ample valuation nuances that the fund manager looks into whilst picking up the holding for each of the funds. Firstly they conduct an assessment whether the fund falls within the theme. Post this they conduct a valuation based on which an appropriate position is initiated within the portfolio. Some of the funds below have done extremely well � Fidelity International Opportunties, Sundaram Rural India, Birla SL Buy India to name a few. Thematic funds are not restricted to equities alone, there could debt funds with themes � UTI Spread, Canara Robeco Indigo are classic examples within this cadre Returns (as on Feb 24, 12)| Fund Name | 1 mth | 6 mths | 1 Year | 3 Year | 5 Year |
| Birla Sun Life Buy India Fund | 3.9 | -2.4 | 2.3 | 29.9 | 7.2 |
| Birla Sun Life India GenNext Fund | 4.3 | 1.2 | 12.2 | 28.9 | 9.4 |
| Birla Sun Life India Reforms | 3.9 | -3.2 | -1.9 | -- | -- |
| Birla Sun Life Pure Value Fund | 5.8 | 2.1 | 4.1 | 31.17 | -- |
| Canara Robeco F.O.R.C.E Fund - Retail Plan | 5.3 | 5.2 | 3 | -- | -- |
| Daiwa Industry Leaders Fund | 4.9 | 6.7 | 0.3 | -- | -- |
| Fidelity India Value Fund | 6.2 | 8.8 | 0.9 | -- | -- |
| Fidelity International Opportunities Fund | 3.3 | 10.8 | 1.2 | 31.83 | -- |
| HSBC Progressive Themes Fund | 12.2 | 11.9 | 2.3 | 11.1 | -1.9 |
| Sundaram Rural India Fund | 4.2 | 0.7 | 3.2 | 28.5 | 5.1 |
| UTI Mahila Unit Scheme | 2.5 | 3.1 | 5.5 | 11.8 | 9.2 |
| Canara Robeco InDiGo | 1.8 | 5.2 | 16.5 | -- | -- |
| UTI SPrEAD Fund | 0.7 | 4.1 | 8.5 | 6.5 | 7.8 |
Holdings and cost Thematic funds operate within their own spectrum and hence benchmarking them to an index may not give a definite picture. However, to get a picture of how they are doing with respect to the market, they are often benchmarked against broader indices such as BSE 200 or BSE 500. The underlying instruments may vary as per the theme that the individual fund deals with; here�s an overview of few funds and their underlying holding � Portfolio (As on Dec 30, 2011)
| Fidelity International Opportunities Fund | |
| Holdings | % |
| National Stock Exchange of India Limited | 14.57 |
| Tata Consultancy Services | 4.53 |
| HDFC Bank | 4.37 |
| Reliance Industries | 4.24 |
| Cipla | 3.46 |
| HSBC Progressive Themes Fund | |
| FAG Bearings India | 8.11 |
| Jammu and Kashmir Bank | 6.53 |
| Polaris Financial Technology | 5.25 |
| Bombay Dyeing and Manufacturing Company | 5.05 |
| ICICI Bank | 3.97 |
| Birla Sun Life India Reforms Fund | |
| ICICI Bank | 7.93 |
| Bharti Airtel | 4.82 |
| Larsen | 4.77 |
| Sadbhav Eng | 4.18 |
| HPCL | 4.01 |
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