Specialty funds invest primarily in a certain sector, industry, region, or security type. These investments do not offer the diversification that many other funds do. As a result, they are often
seen as a riskier investment. The specialty fund is often used to describe a variety of funds, including sector funds, index funds and international funds.
Thematic funds invest in line with an investment theme. For example, an infrastructure thematic fund might invest in shares of companies that are into infrastructure construction, infrastructure
toll-collection, cement, steel, telecom, power etc. The investment is thus more broad-based than a sector fund; but narrower than a diversified equity fund and still has the risk of concentration.