According to Vallum Capital Advisors' latest report titled "Vallum Cross-Asset Macro Grid," thematic mutual funds have experienced significant performance divergence in 2026. Defence funds delivered the strongest median performance with 25.8% gains, followed by Healthcare at 17.2% and IPO-themed funds at 15%. Innovation and Manufacturing completed the top five with returns of 10.1% and 8.3% respectively, as reported by Mint. The gap between Defence, the top-performing category, and Railways, the weakest performer, stands at 48.2 percentage points.
The report reveals that Railways funds recorded the steepest decline at -22.4% in 2026, followed by Technology with a 16.5% decline. Sector Leaders, ESG, and Consumption categories also remained in negative territory, declining 7%, 5%, and 4% respectively. As reported by Mint, these categories have shown the most significant underperformance compared to the overall thematic fund universe.
Recent one-month data shows a much narrower set of positive performers compared to the full-year results. According to the report, IPO and Defence were the only two categories among the 2026 top five to deliver positive returns over the latest one-month period. IPO-themed funds led with 2.2% median gain, followed by Defence at 1.4%. Healthcare, Innovation, and Manufacturing, despite being among the leading categories on a 2026 basis, posted negative returns over the latest month.
As India accelerates toward becoming a USD 10 trillion economy, thematic and sectoral funds offer focused exposure to the country's structural growth stories. Energy emerges as the foundational theme that powers all other sectors, with India projected to add nearly 580 GW of new power generation capacity over the next decade - more than it has added in its entire history. The Nifty Energy TRI has consistently outperformed the broader Nifty 500 TRI across 1, 3, 5, 7 and 10-year periods, with a ₹1 lakh investment nearly 25 years ago growing to approximately ₹70 lakh by June 2026 at an 18.1% CAGR.
Over the longer five-year period, all thematic categories delivered positive returns, with PSU and Transportation & Logistics among the strongest performers. PSU funds delivered 22.6% returns while Transportation & Logistics achieved 20.9% returns. As reported by Mint, Infrastructure, Special Opportunity, and Manufacturing also posted positive five-year CAGRs, with returns ranging from 18.8% to 17.4%. The data highlights how different themes have performed across different time frames for mutual fund investors.
