Explore the latest trends in mutual fund sector allocations, highlighting preferences and shifts in equity-oriented investments over the past year.

Decoding mutual fund sector allocation trends

Equity-Oriented Mutual Funds Sector Allocations Shift

According to recent data, within equity-oriented mutual funds, sector allocations have undergone significant changes over the past year.

Top Preferred Sectors

Banks: Maintained the largest allocation at nearly 22% of equity AUM, with a notable rise of 31% in the last one year to ₹10.24 lakh crore.
Finance: Exposures increased both in value and portfolio weight (4.8% to 5.4%).
Pharma: Exposure rose in absolute terms but declined in portfolio share (5.8% to 5.1%).
Automobiles: Remained a preferred sector.
IT-Software: Saw a clear underweighting, with allocations being inconsistent throughout the year and the sector's share dropping sharply from 9.1% to 7.4%.

In conclusion, the mutual fund industry's sector allocations have undergone notable shifts over the past year, reflecting changing market trends and investor preferences.

Published on February 17, 2026