Thematic PSU Mutual Funds

Thematic PSU mutual funds are a type of equity fund that invests in public sector undertakings (PSUs), which are companies owned by the government of India or state governments. You should only invest in these schemes if you have a long investment horizon or have intimate knowledge about the sector.
EXPLORE FUNDS
What are Thematic PSU Mutual Funds
EXPLORE FUNDS
3 min
11-December-2025

Thematic funds are a category of equity mutual funds in India that invest in companies linked by a common idea or investment theme. These themes may include areas such as infrastructure development, consumption growth, digital innovation, sustainability or public sector undertakings (PSUs). As per SEBI regulations, thematic funds invest at least 80% of their portfolio in equities related to the chosen theme.

Unlike sectoral funds, which are restricted to a single sector, thematic funds offer relatively broader exposure by investing across multiple sectors that align with the central theme. However, they still remain focused on a specific investment thesis, making their performance closely tied to how that theme plays out in the economy and markets.

Because of their concentrated nature, thematic funds can deliver strong returns when the theme performs well, but they also carry higher risk if the theme underperforms.

In this article, we will explore thematic PSU mutual funds, explain their meaning, discuss how they differ from other equity funds, and cover their benefits, risks and key factors to consider before investing.

What are Thematic PSU mutual funds?

Thematic PSU mutual funds invest exclusively in public sector undertakings (PSUs). Public sector undertakings are companies where the government of India or the various state governments hold the controlling stake (51% or more). These entities often play a significant role in various key sectors of the Indian economy such as energy, infrastructure, banking and financial services and capital goods.

Although the portfolio of stocks may vary depending on the type of thematic PSU mutual fund you choose, most funds have stocks across multiple industries and market capitalisations to diversify risk.

Who should consider investing in thematic PSU mutual funds?

Now that you know what a thematic PSU mutual fund is, let us look at who this mutual fund is for.

If you are looking to gain exposure to some top-performing public sector undertakings across multiple sectors and industries, you could consider investing in thematic PSU mutual funds.

That said, despite the inherent diversification, thematic PSU mutual funds still carry a high level of risk since the portfolio is concentrated on public sector undertakings. So, if you are an investor with a fairly high level of risk tolerance and a long-term investment horizon, you may find these funds suitable.

However, remember to conduct thorough research and compare multiple thematic PSU mutual funds to ensure that they match your risk tolerance level and investment objectives before you invest in these funds. Invest in thematic PSU mutual funds or 1000+ other mutual fund options on the Bajaj Finserv Mutual Funds platform.

Taxability of thematic PSU mutual funds

As a potential investor, it is not enough to merely understand the meaning of thematic PSU mutual funds; you also need to know how the returns from these funds are taxed. Here is an overview of the taxability aspect of thematic PSU funds

  • Taxability of dividends
    The dividends you receive from your thematic PSU mutual fund investments are added to your total income and taxed according to the income tax slab rate applicable to you.
  • Taxability of capital gains
    The returns/profits you receive from the sale of your thematic PSU mutual fund investments are classified as capital gains as per the Income Tax Act, 1961. If your total holding period is less than 12 months, the returns are classified as short-term capital gains (STCG) and are taxed at a flat rate of 15%.
    On the other hand, if your total holding period is more than 12 months, the returns are classified as long-term capital gains (LTCG) and are taxed at a flat rate of 10%. However, only LTCG of more than Rs. 1 lakh are subject to tax.
    This means that if your long-term returns from a thematic PSU mutual fund are less than Rs. 1 lakh, you do not have to pay any tax on the gains. If your returns exceed Rs. 1 lakh, only that portion of the returns that is more than the limit is taxed. Also read about Income Tax slabs of FY 24-25 for taxation.. 

Top performing funds

Equity

Debt

Hybrid

Tax saver

View All
View all

Related videos

Bajaj Finserv app for all your financial needs and goals

Trusted by 50 million+ customers in India, Bajaj Finserv App is a one-stop solution for all your financial needs and goals.

You can use the Bajaj Finserv App to:

  • Apply for loans online, such as Instant Personal Loan, Home Loan, Business Loan, Gold Loan, and more.
  • Invest in fixed deposits and mutual funds on the app.
  • Choose from multiple insurance for your health, motor and even pocket insurance, from various insurance providers.
  • Pay and manage your bills and recharges using the BBPS platform. Use Bajaj Pay and Bajaj Wallet for quick and simple money transfers and transactions.
  • Apply for Insta EMI Card and get a pre-qualified limit on the app. Explore over 1 million products on the app that can be purchased from a partner store on Easy EMIs.
  • Shop from over 100+ brand partners that offer a diverse range of products and services.
  • Use specialised tools like EMI calculators, SIP Calculators
  • Check your credit score, download loan statements and even get quick customer support—all on the app.

Download the Bajaj Finserv App today and experience the convenience of managing your finances on one app.

Do more with the Bajaj Finserv App!

UPI, Wallet, Loans, Investments, Cards, Shopping and more

GET THE APP

Disclaimer

Bajaj Finance Limited (“BFL”) is an NBFC offering loans, deposits and third-party wealth management products.

The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.

Disclaimer:

Bajaj Finance Limited ("BFL") is registered with the Association of Mutual Funds in India ("AMFI") as a distributor of third party Mutual Funds (shortly referred as 'Mutual Funds) with ARN No. 90319

BFL does NOT:

(i) provide investment advisory services in any manner or form:

(ii) carry customized/personalized suitability assessment:

(iii) carry independent research or analysis, including on any Mutual Fund schemes or other investments; and provide any guarantee of return on investment.

In addition to displaying the Mutual fund products of Asset Management Companies, some general information is sourced from third parties, is also displayed on As-is basis, which should NOT be construed as any solicitation or attempt to effect transactions in securities or the rendering any investment advice. Mutual Funds are subject to market risks, including loss of principal amount and Investor should read all Scheme/Offer related documents carefully. The NAV of units issued under the Schemes of mutual funds can go up or down depending on the factors and forces affecting capital markets and may also be affected by changes in the general level of interest rates. The NAV of the units issued under the scheme may be affected, inter-alia by changes in the interest rates, trading volumes, settlement periods, transfer procedures and performance of individual securities forming part of the Mutual Fund. The NAV will inter-alia be exposed to Price/Interest Rate Risk and Credit Risk. Past performance of any scheme of the Mutual fund do not indicate the future performance of the Schemes of the Mutual Fund. BFL shall not be responsible or liable for any loss or shortfall incurred by the investors. There may be other/better alternatives to the investment avenues displayed by BFL. Hence, the final investment decision shall at all times exclusively remain with the investor alone and BFL shall not be liable or responsible for any consequences thereof.

Investment by a person residing outside the territorial jurisdiction of India is not acceptable nor permitted.

Disclaimer on Risk-O-Meter:

Investors are advised before investing to evaluate a scheme not only on the basis of the Product labeling (including the Riskometer) but also on other quantitative and qualitative factors such as performance, portfolio, fund managers, asset manager, etc, and shall also consult their Professional advisors, if they are unsure about the suitability of the scheme before investing.


Disclosure: Bajaj Finance Limited (BFL) is a distributor of Mutual Funds with ARN - 90319 and distributes mutual funds of Bajaj Finserv Asset Management Limited (BFSAMC). BFL receives commission towards distribution of mutual fund products. BFSAMC is a group company of BFL, carrying business on arm’s length basis without any conflict of interest and in accordance with the prevailing law / regulation.