Best Energy Mutual Funds in India 2025

As the consciousness about environmental concerns increases globally, Energy mutual funds offer an excellent way to invest in companies that are shaping the future of the energy sector. With these funds, an investor will be able to invest in a wide number of energy-related securities, earning good returns, and supporting industry development. In this article, we will explore top energy mutual funds, which are important in the investment landscape as well as how they are helpful to investors in making effective decisions in line with their financial aspirations.

What are Energy Mutual Funds?

Energy mutual funds are thematic-sectorial mutual funds that concentrate on companies operating in the production, development, and distribution of different forms of energy. These funds gather and pool money from multiple investors and invest in securities within the energy sector. The main objective of these funds is to provide investors with an opportunity to invest in the growing energy sector.  

How Do Energy Mutual Funds Work?

Energy mutual funds operate by pooling money from multiple investors and investing that capital in various securities within the energy sector, including oil, gas, coal, and renewable energy. These funds are managed by professionals who possess expertise and knowledge of the energy market. Energy sector mutual funds invest at least 80% of their net assets in equity-related instruments of companies within India's energy sector.

While these funds provide an opportunity to invest in the energy market, they also carry significant risks. The performance of energy funds often fluctuates based on energy prices and demand.

List of the Best Energy Mutual Funds in 2025 for Long Term SIP

1. SBI Energy Opportunities

The objective of this fund is to provide investors with opportunities for long-term capital appreciation by investing in equity-related and debt instruments of companies engaging in activities such as exploration, production, distribution, transportation, and processing of traditional & new energy. The fund has invested 96% in equities and 4% in debt-related securities. Top allocations are Reliance Industries, BPCL, NTPC, Thermax, Petronet, Torrent Power, etc.

• Current NAV: Rs.10.61

• Expense Ratio: 1.74%

• Minimum SIP: Rs.500

• Minimum Lumpsum: Rs.5000

2. ICICI Prudential Energy Opportunities Fund

This fund aims to provide investors with the opportunity to invest in various energy-related equity and debt-related securities for capital appreciation. This fund has invested 89% of its corpus in Equity and 9% in Debt securities. The top holdings include Reliance Industries, ONGC, NTPC, Power Grid Corporation, TREPS, HPCL, Coal India, etc.

• Current NAV: Rs.9.75

• Expense Ratio: 1.72%

• Minimum SIP: Rs.100

• Minimum Lumpsum: Rs.5000

3. Nippon India Power & Infra Fund

The fund aims to generate capital appreciation through companies that are engaged in the power and infrastructure sector in India. The fund has 98% in equity and 2% in debt securities of its total corpus. The top holdings of the fund are L&T, Reliance Ind, NTPC, Ultratech Cement, Kaynes Tech, Bharti Airtel, and Tata Power.

• Current NAV: Rs.363.21

• Expense Ratio: 1.83%

• Minimum SIP: Rs.100

• Minimum Lumpsum: Rs.5000

4. Quant Infrastructure Fund

The main goal of this scheme is to achieve capital appreciation and provide long-term growth opportunities by investing in securities focused on infrastructure and energy-related sectors. This fund has distributed 90% of its corpus in Equity and 6% in Debt instruments, with top allocations being L&T, Tata Power, Reliance Industries, Adani Power, Afcon Infra, and NTPC

• Current NAV: Rs.40.12

• Expense Ratio: 1.89%

• Minimum SIP: Rs.1000

• Minimum Lumpsum: Rs.5000

5. Invesco India Infrastructure Fund

Invesco India Infrastructure Fund is structured to benefit from the emerging opportunities in the infrastructure and related energy space. With a portfolio allocation of 98% in Equity and 1.5% in Debt securities. This fund invested in industry leaders such as Larsen & Toubro, Power Grid Corporation of India, Tata Power, and BEML.

• Current NAV: Rs.66.44

• Expense Ratio: 2.09%

• Minimum SIP: Rs.500

• Minimum Lumpsum: Rs.1000

6. DSP Natural Resources And New Energy Fund

This energy fund aims for capital appreciation by investing in securities associated with the discovery, development, production, and distribution of natural resources, including mining. It focuses particularly on renewable energy and alternative energy. This fund has 80% of its corpus invested in Equity and 5% in Debt securities. The majority of allocation is made in companies like Hindalco, Coal India, Jindal Steel, Blackrock World Energy, Gail, and TREPS.

• Current NAV: Rs.89.82

• Expense Ratio: 2.11%

• Minimum SIP: Rs.100

• Minimum Lumpsum: Rs.100

7. Tata Resources And Energy Fund

This fund's objective is to achieve long-term capital growth by capitalising on the growing energy and resource sector. The fund dominantly allocated its investments to companies engaged in the resources and the energy sector within the Indian economy, investing more than 96% of its corpus in equity and 3% in Debt securities. The top holdings of this fund are NTPC, Vedanta, Reliance Industries, BPCL, and Adani Energy.

• Current NAV: Rs.44.32

• Expense Ratio: 2.16%

• Minimum SIP: Rs.100

• Minimum Lumpsum: Rs.5000

8. Sundaram Infrastructure Advantage Fund

This fund is designed for investors who are seeking consistent long-term returns by investing predominantly in equity/equity-related instruments of companies engaged either directly or indirectly in infrastructure and energy-related activities. This fund invested 95% of its corpus in equity and 5% in debt securities, the major share of allocation being made to companies such as L&T, NTPC, Reliance Industries, GE Vernova, and Bharat Electronics.

• Current NAV: Rs.95.51

• Expense Ratio: 2.36%

• Minimum SIP: Rs.100

• Minimum Lumpsum: Rs.100

Advantages and Disadvantages of Energy Mutual Funds

Advantages of Energy Mutual Funds  

• The gradual shift to renewables:  Renewable energy sources such as wind and solar are part of the energy picture today as efforts are being made to reduce fossil fuels and their carbon footprint. By investing in energy mutual funds investors will be able to be a part of the energy development as well as earn good returns.  

• Future Prospects: India is committed to achieving 777 GW of total energy capacity by 2030, positioning the sector for significant growth. Furthermore, advancements in technology, declining energy production costs, and growing investor awareness of sustainable investing are anticipated to drive increased investments in this sector.

• Environmental Benefits: Investing in energy mutual funds will help to support global sustainability goals and make investors part of the energy transition.

Disadvantages of Energy Mutual Funds

• Regulatory Risk: Changes in government policies and environmental regulations regarding the energy sector can impact the performance of energy companies, thereby affecting returns as well.

• Sector Specific: Mutual funds in energy are sector-specific making them vulnerable to fluctuations in oil, gas, and energy prices, potentially leading to higher volatility.

• Limited Diversification: Even though energy sector mutual funds invest in various energy-related securities, they are still sector-specific. This lack of diversification outside the energy sector can pose increased risk compared to general mutual funds.

Tax Implication on Energy Mutual Funds

In India Taxation on energy or any mutual funds varies based on the type of fund and holding period. As per the 2024 Budget, any equity-based mutual fund units sold on or after Jul 23, 2024, will have the following tax implications

• Energy mutual funds: STCG is liable for 20% in case of holding for less than a year. If the funds are held for over a year, LTCG is charged on gains exceeding Rs.1.25 lakh at 12.5%. 

Who should Invest in Energy Mutual Funds? 

The energy mutual funds are open-ended schemes and can be highly volatile in the short term, these funds are best suited for investors who have sector-specific financial goals and have an appetite for risk. Investors who want to diversify their investments and see a long-term prospect in the energy sector consider investing in energy mutual funds.

How to Invest in Energy Mutual Funds

To invest in any Mutual Funds in India, you need to have a KYC-verified Demat account or have your KYC updated in KRA records.

KRA (KYC Registration Agency) is a SEBI-registered entity that manages and maintains KYC records for mutual fund customers centrally.

You can invest in mutual funds online by following a few simple steps:

• STEP 1: Download the Rupeezy App from the Google Play Store or iPhone App Store

• STEP 2: Open the app and register using your using mobile number.

• STEP 3: Then, you will be redirected to the KYC page where you need to complete your verification by adding the required details like PAN and AADHAR

• STEP 4: After completing this step, you will receive a client code and be asked to set a password. 

• STEP 5: Once these steps are completed, you can log in to the app, click on the invest section, and select the desired funds you would like to invest in.

Conclusion

Energy mutual funds offer a great opportunity for investors seeking to align their financial goals with the fast-changing and dynamic energy sector. It provides an opportunity for investment in both traditional and renewable sources of energy, thereby participating in India's energy transition while supporting global sustainability goals. Thus, with a strong focus on the development of infrastructure, growing demand for energy, and gradual transition towards more and more renewables, these funds can potentially yield high long-term capital appreciation.

However, these funds are sector-specific and thus volatile, prone to regulatory risks, and lack diversification, thus, they are more suited for informed investors with a high-risk appetite and a deep interest in energy markets.