Sectoral & thematic funds are making everyone good money. Time to bite?

Since 2023, more than half of new funds - 92 of the 167, to be precise - are sectoral and thematic funds; investors have pumped in more than Rs 55,000 crore in these new launches. You get the idea: these funds are hot. The others, at best, are meh. Why is that the case? These funds are raining down not because it's the monsoon but because the fund houses have to play by the rules. In 2017, SEBI, the markets regulator, dictated that fund houses could launch just one fund per category. (Examples of categories are large caps, mid caps, small caps, flexi caps, among others). However, there were no such strict rules to launch thematic and sectoral funds, which means fund houses could launch one tourism fund, one defence fund, one consumption fund and so on. As a result, sectoral and thematic funds are springing up like mushrooms. Case in point: since 2018, 190 new sectoral and thematic funds have l