The raging bull market over the last three years has attracted massive flows into sectoral and thematic funds. The number of folios and the assets under management of these funds as of December 2024 have nearly tripled in three years. Such funds give outsized returns only in a favourable upcycle and the returns they deliver year-on-year vary widely. Investors need to be wary of this fact. The inconsistencies in performance are depicted in the charts.
