Sectoral debt funds in India
1 live fund in the Sectoral Debt category, ordered by 5-year return, highest first. Funds younger than five years follow by name. Returns are for the plan each fund's page leads with, Direct where the fund has one, to each fund's latest NAV, the newest of them on 27 Oct 2026; 3 and 5 year returns are a year, compounded.
Sectoral Debt funds
Size is the average money the fund managed over its latest quarter. Cost is its yearly expense ratio.Filter them in the screener
DSP Financial Services Sectoral Debt FundDSP Mutual FundNAV₹10.05591Y–3Y–5Y–Size₹245 CrCost0.28%
Tax on sectoral debt funds
Gains on units bought on or after 1 Apr 2023 are taxed at the income tax slab rate however long they are held; gains on units bought earlier are taxed at 12.5% when held over 24 months, or over 12 months for a listed fund such as an ETF, and at the slab rate otherwise.
Rules in force from 23 Jul 2024, checked 27 Oct 2026. Surcharge and cess are not included.
About sectoral debt funds in India
Sectoral debt funds in India are debt mutual funds that put at least 80% of their assets into bonds and money market instruments of one sector, such as financial services. SEBI created the category on 26 Feb 2026, so its funds are new and have short track records.
What SEBI requires
SEBI's circular of 26 Feb 2026 requires a sectoral debt fund to invest at least 80% of total assets in debt and debt-related instruments of one named sector, of any duration, with corporate bonds only if rated AA+ or above. A rating is a credit agency's opinion of whether the issuer will repay; AAA is the highest.
A fund may be launched only for financial services, energy, infrastructure, housing or real estate, and only where enough investment grade bonds of that sector are available. The usual cap on how much a debt fund may put into a single sector does not apply, and part of the remaining 20% may go into InvITs (trusts that own income-earning infrastructure).
How the funds are run
Each scheme names its sector in its title, as in a Financial Services Sectoral Debt Fund. A financial services fund holds bonds, commercial paper and certificates of deposit issued by banks, finance companies and similar lenders. Duration is left open, so one fund may hold short paper while another holds long bonds of the same sector.
Difference from banking and PSU funds
A banking and PSU fund, an older SEBI category, puts at least 80% into debt of banks, public sector undertakings, public financial institutions and municipal bodies, whatever their business. A sectoral debt fund is defined by one sector instead. Corporate bond funds spread across sectors, and gilt funds hold government paper.
Risks specific to one sector
Concentration is the main difference from other debt funds. Issuers in one sector share the same regulation, funding costs and economic cycle, so a stress in that sector affects many holdings together. Interest rate risk applies as in any debt fund: when rates rise, the price of existing bonds falls, and longer bonds fall more.
Returns on the page
Funds in this category date from 2026, so the page cannot rank them by 5-year return yet: they appear by name, with a dash in each return column until a fund has a full year, three years or five years of history.