Why are investors shying away from sectoral and thematic mutual funds in 2025?

Sectoral and thematic equity mutual funds, popular in 2024, are experiencing reduced investor interest due to volatile returns and increased risk. Net inflows have significantly decreased from an average of ₹15,340 crore to ₹1,408 crore monthly. Investors, possibly mis-sold and unaware of the risks, are liquidating holdings after market sell-offs, prompting caution from analysts regarding retail participation.

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