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Thematic Mutual Funds Split Sharply Across Categories in 2026
Different mutual fund themes performed very differently in 2026.
Defence funds had the biggest gain, rising 25.8%.
Healthcare and IPO-focused funds also rose strongly.
Railways funds had the biggest fall, dropping 22.4%.
Technology funds also lost money during the year.
Looking only at the latest month, IPO and Defence were the only leading categories that gained.
Over five years, every thematic category in the report had positive returns.
The figures show that results can change a lot depending on the period and theme chosen.
Defence funds led 2026 thematic categories with a 25.8% median return as of 15 September.
Healthcare, IPO, Innovation and Manufacturing followed among the reported top categories, gaining 17.2%, 15%, 10.1% and 8.3%.
Railways fell 22.4%, while Technology, Sector Leaders, ESG and Consumption also posted negative 2026 returns.
IPO and Defence were the only 2026 top-five categories with positive one-month returns, gaining 2.2% and 1.4%.
All thematic categories delivered positive five-year returns, led by PSU at 22.6% and Transportation and Logistics at 20.9% CAGR.
- Who
- Mutual fund investors and thematic mutual fund categories covered in Vallum Capital Advisors’ report.
- What
- The report compares thematic mutual fund category performance over 2026, the latest month and five years.
- Where
- The report covers thematic mutual fund categories; no specific geographic market is identified in the article.
- When
- Returns were reported as of 15 September 2026.
- Why
- To show how widely thematic fund returns differed across themes and time periods.
Key facts
- Best 2026 category
- Defence, with a 25.8% median return.
- Weakest 2026 category
- Railways, with a 22.4% decline.
- 2026 performance gap
- The gap between Defence and Railways was 48.2 percentage points.
- Positive one-month categories
- IPO gained 2.2% and Defence gained 1.4%.
- Best five-year category
- PSU, with a 22.6% compound annual growth rate.
- Five-year period
- All thematic categories recorded positive returns over five years.
- Data source
- Vallum Capital Advisors’ “Vallum Cross-Asset Macro Grid” report.
Sources
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