The terms Thematic and Sectoral are often used loosely and interchangeably. But there is a difference between the two when it comes to mutual funds.
Sectoral vs Thematic Fund
A Sectoral fund invests in a single sector (automobiles, pharmaceuticals and soon) while a Thematic fund invests around a broad theme that cuts across sectors. An example of a thematic fund is an Infrastructure fund that invests in capital goods, construction, mining, energy and communication stocks.
