Best Thematic Funds in India for January 2026: ICICI Pru Business Cycle Fund, SBI PSU Fund and More

Written by: Sachin GuptaUpdated on: 8 Jan 2026, 10:46 pm IST

Thematic mutual funds invest in specific long-term trends like technology or sustainability, offering focused growth opportunities.

Investing in thematic mutual funds offers investors an opportunity to participate in long-term trends and ideas that are shaping the future of the economy. These funds focus on specific themes such as technology, healthcare, sustainability, infrastructure, or digital transformation, rather than broad market sectors.

By aligning investments with powerful structural changes, thematic mutual funds aim to generate growth over time while allowing investors to express conviction in particular economic or social developments. In this read, we’ll take a closer look at some of the best thematic funds in India for January 2026.

Best Thematic Funds for January 2026: Absolute Return Basis

Name	AUM (₹ Cr)	Absolute Returns (1Y) %
ICICI Pru Business Cycle Fund	15,708.10	17.25
ICICI Pru India Opp Fund	33,946.37	13.10
SBI PSU Fund	5,762.54	12.95
HDFC Defence Fund	7,402.96	12.20
Aditya Birla SL PSU Equity Fund	5,627.47	11.91

Note: The above-mentioned schemes have been selected based on 1Y Absolute Return as of Jan 2, 2026, with a minimum AUM of ₹5,000 Crore

Overview of Top Thematic Funds

ICICI Pru Business Cycle Fund

ICICI Pru Business Cycle Fund aims to derive long-term capital appreciation by investing with afocus on riding business cycles through allocation between sectors and stocks at different stages of business cycles.

Expense Ratio: 0.75%
NAV: ₹27.67

SBI PSU Fund

SBI PSU Fund focuses on generating long-term growth in capital via investments in a diversified basket of equity stocks of domestic PSU and in debt and money market instruments issued by PSUs and others.

Expense Ratio: 0.83%
NAV: ₹38.27

HDFC Defence Fund

HDFC Defence Fund is an open-ended equity scheme investing in Defence & allied sector companies

Expense Ratio: 0.80%
NAV: ₹24.66

Also Read: Best Gold ETFs in India for January 2026: SBI Gold ETF, HDFC Gold ETF, and More

Best Thematic Funds for January 2026: 3Y CAGR Basis

Name	AUM (₹ Cr)	CAGR 3Y (%)
Franklin India Opportunities Fund	8,303.72	32.02
SBI PSU Fund	5,762.54	30.45
Aditya Birla SL PSU Equity Fund	5,627.47	28.56
ICICI Pru Manufacturing Fund	6,646.79	26.58
ICICI Pru India Opp Fund	33,946.37	24.58

Conclusion

While thematic mutual funds can provide attractive growth potential and portfolio diversification, they also require careful evaluation and a long-term investment horizon. Since their performance is closely tied to the success of a specific theme, they may experience higher volatility compared to diversified equity funds.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Published on: Jan 6, 2026, 3:35 PM IST

Sachin Gupta

Sachin Gupta is a Content Writer with 6+ years of experience in the stock market, including global markets like the US, Canada, and Australia. At Angel One, Sachin specialises in creating financial content that simplifies complex market trends. Sachin holds a Master's in Commerce, specialising in Economics.

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