Energy mutual funds are thematic equity schemes that invest primarily in companies across the energy sector, including oil & gas exploration, refining, power generation and distribution, coal mining, renewable energy, energy equipment, and financing companies. According to SEBI regulations, thematic funds must invest at least 80% of their assets in the theme they follow, making energy funds highly concentrated in energy-related sectors. These funds also include investments in supporting businesses such as steel and cement companies, providing exposure to the broader energy value chain.
As of May 31, 2026, the SBI Energy Opportunities Fund leads with ₹8,906 crore AUM, followed by the ICICI Prudential Energy Opportunities Fund at ₹8,581 crore. The DSP Natural Resources and New Energy Fund ranks third with ₹2,457 crore, while the Tata Resources & Energy Fund holds ₹1,381 crore and the Baroda BNP Paribas Energy Opportunities Fund manages ₹700 crore. According to Value Research data, these funds show varying sector allocations, with SBI Energy Opportunities Fund having the highest concentration in Energy & Utilities at 62.66%, followed by ICICI Prudential Energy Opportunities Fund at 53.23%.
Investors should consider sector allocation, top holdings, performance metrics, and expense ratios when evaluating energy funds. As reported by Mint, some funds are heavily tilted towards conventional energy companies while others diversify into materials, industrials, or renewable energy. The funds' top holdings include major energy companies such as Reliance Industries, ONGC, NTPC, and Gujarat Gas. Key risks include dependence on a single sector, cyclical nature of energy markets, and policy and regulatory challenges that can impact energy-related businesses.
Energy funds offer professional management and exposure to a vital sector that remains central to economic growth and industrial activity. According to the analysis, these funds provide opportunity to benefit from energy transition through rising investments in renewable energy, transmission networks, and cleaner technologies. The funds offer diversified investment opportunities across the energy ecosystem, with fund managers actively tracking developments across the sector.
