Sectoral and thematic funds offer focused exposure to specific market trends, potentially generating outsized returns for experienced investors. Recent top performers in calendar year 2025 included Nifty PSU Bank, Nifty Auto, and Nifty Metal, driven by factors like liquidity, demand, and commodity prices. However, these concentrated bets are inherently volatile, with rapid leadership shifts and sharp swings, as seen in the Nifty Realty and Auto indices. Experts advise caution and suggest limiting exposure to satellite portfolios.