Sectoral Fund Inflows Rise Amid New Launches; Mutual Funds Increase Cash Holdings

In February, sectoral and thematic mutual funds saw a 187% increase in inflows to Rs 2,987 crore, largely driven by new fund launches and selective sector investments rather than broad-based demand. Concurrently, 63% of mutual fund houses raised cash levels amid market volatility, with equity funds holding Rs 1.36 lakh crore in cash. Focused equity mutual funds, investing in up to 30 stocks, offer concentrated portfolios that can yield higher returns but carry increased risk, appealing to investors with longer horizons and higher risk tolerance.