New Delhi, May 27 -- Sectoral and thematic funds are one such mutual fund category that allows you to invest in a particular sector or investment theme. Unlike diversified equity funds, these schemes have a concentrated portfolio, making it important for investors to thoroughly analyze risk factors before investing.

So, let's explore the risks and metrics you need to consider before investing in sectoral and thematic funds.

As per SEBI guidelines, sectoral/ thematic funds are required to invest at least 80% of the accumulated funds into the stocks of the specific sector and theme. Both sectoral and thematic funds are types of equity mutual funds, but they follow a different approach.

Sectoral funds invest in a specific sector, such as ...