Best Power Sector Mutual Fund to Invest in India (2025)

As a mutual fund investor, you must not miss out on sectoral growth opportunities. In the FY 2024-2025, power sector mutual funds delivered about a 56% return on average. 

This indicates a growth opportunity as the demand for both renewable and conventional energy is rising in 2025. Read this blog to explore the 8 best mutual funds to invest in.

Quick Synopsis

• These funds allocate your invested money in conventional and renewable sectors.
• Products and services of the energy sector in India are in high demand, indicating a growth potential.
• Expand your investment portfolio, take advantage of increasing demand, and seize growth opportunities by allocating funds to these assets.

8 Power Sector Mutual Funds in 2025

Note: Values in the table are as of July 24, 2025, and are subject to change. Verify before investing! 

Working Process of Power Sector Mutual Fund

Having a list of power sector mutual funds is not enough for making an informed decision, and therefore, you must learn about their working mechanism. 

As the name suggests, this type of fund invests in the stocks of companies within the energy sector. These companies may be involved in the production, exploration, distribution, or marketing of coal, oil, gas, renewable energy, and more.

Thus, when they grow, these funds aim to capitalise on such opportunities and generate returns.

Benefits of Investing in Power Sector Mutual Funds

You can diversify your portfolio, leverage the higher demand and fetch growth opportunities by investing in these funds:

• Diversification: When you invest in the best power sector mutual funds, you get exposure to companies from both the conventional and renewable energy industries. This helps to diversify risk across multiple assets from two different industries.
• Growth Opportunity: As per recent statistics, the projected growth of the renewable energy sector in 2025 is between 18% to 25%, which in turn increases return potential. This justifies the benefits of investing in the power sector mutual fund.
• High Demand: India ranks third in terms of energy consumption in the world. This is an added advantage, with rising demand, your investments might become profitable.

Aside from a mutual fund, a Fixed Deposit increases your return potential further. Download the Stable Money app, book an FD and earn an 8.40% guaranteed yearly returns. 

Risk Factors in Power Sector Mutual Funds

Learn how market volatility, liquidity issues, and inflation become risk factors for such funds:

• Market volatility acts as a primary risk factor in the power sector mutual fund. It means a market downturn can lower the equity value, which in turn can lead to short-term losses in mutual fund investments.
• Some energy stocks might have a lower trading volume, which increases liquidity risks, leading to potential losses.
• Inflation presents a significant risk that affects the portfolio of the power sector mutual fund's share price. For instance, if inflation is at 3% and the expected return from the fund is 6%, your actual return is only 3%. 

Tax Implications on Gains from Power Sector Mutual Funds

Tax implications on gains from mutual funds as of the Union Budget 2024-2025 are as follows:

• If your holding period is less than 12 months, the capital gain tax in the short term or STCG is 20%.
• When the holding period exceeds 1 year or more and gains exceed ₹1.25 lakh, the long-term capital gains tax rate is 12.5%.

3 Tips to Maximise Your Gain Potential From Power Sector Mutual Funds

1. Risk Profile: Take note of the risk profile of a fund before investing in it. For example, SBI Energy Opportunities Fund has a ‘very high risk’ profile, so invest after considering your risk appetite.
2. Sectoral Demand: As an example of sectoral demand, between 2024 and 2025, the coal-based power demand in the country is projected to reach 220.49 GW. Monitoring such trends can aid in selecting the right fund for investment and profit-making.
3. Regulatory Shifts: Stay updated with news about regulatory changes in the power or energy sector. Any sudden shifts in such regulations can severely impact the power sector stocks. 

An investment in the power sector mutual funds brings you the opportunity to harness the growth of conventional and the emerging green energy sector. Combined with the surge in traditional energy demand, this investment has the potential to bring you profit over time. 

Stable Money offers FD and RD investment options, which also generate consistently high returns. Earn up to 8.40% on FDs and 8.30% on RDs booked on the Stable Money app.