New Delhi, Aug. 4 -- With benchmark indices delivering muted returns over the past few years, many investors are looking beyond broad-market index funds for better opportunities. Passive sectoral and thematic funds - tracking banks, metals, energy, chemicals, defence, capital markets and more - have emerged as a popular alternative and are attracting attention despite their higher concentration risk.

Passive sectoral or thematic funds are index funds or ETFs that replicate the performance of a sector- or theme-specific index. With base expense ratios ranging from about 0.14% to 0.50%, they offer a relatively low-cost way to gain exposure to specific sectors or investment themes.

"If you want exposure to a particular sector but don't wan...