“Risk-Adjusted Performance of Sectoral Thematic Mutual Funds During Market Volatility: Empirical Evidence from India”

Abstract

For Indian investors seeking customised exposure, thematic mutual funds, which are characterised by their sector-oriented investing strategies such as infrastructure, technology, or ESG, have become increasingly popular. Their performance in unstable market conditions has been a major cause of concern (risk exposure and consistency in returns). This research,by employing a multi-metric analysis approach (sourced from standard financial literature), measures the risk-adjusted performance of sectoral thematic mutual funds during periods of Indian market volatility.

Across (2021–2024), a sample of the top-performing theme-based mutual funds across an array of sectors, such as: FMCG, IT, Infrastructure, and Pharma is analysed with a specific focus on the periods of unprecedented volatility induced byCOVID-19 pandemic, geopolitical events, and monetary tightening phases through policy interventions, The study examines return consistency, downside risk, and relative market performance indices through the Sharpe Ratio, Treynor Ratio, Jensen's Alpha, Betacoefficient, Standard Deviation, and Sortino Ratio. For accuracy and comparability, secondary data are sourced from AMFI, NSE sectoral indices, and other official sources like Moneycontrol.com.

Based on preliminary findings, certain industries, such as pharmaceutical and FMCG, exhibit resilience during market distress, while others are exposed to volatility shocks. Most importantly; downside metrics like the Sortino Ratio highlight risk profiles that are relevant to investors but which are missed by traditional Sharpe calculations. By bringing together empirical rigour and practitioner sensitivity, this research contributes to mutual fund knowledge and offers guidelinesto policy analysts, fund managers, andretail investors.

The research lends credence to sectoral risk dynamics getting more visibility into the Indian mutual fund market, and facilitates more informed theme investing choices by embracing a multidimensional performance study approach.