India is growing at a rapid pace today. With this economic growth comes a massive demand for power across the country. The nation is slowly moving away from traditional coal and focusing heavily on clean power sources. This major shift is creating new chances for wealth creation in the stock market. The government is also backing change to a cleaner future with supportive policies. It is a very exciting time to watch the financial markets adapt to these positive changes. Let us explore a simple and effective way to participate in this changing landscape.
What are Renewable Energy Mutual Funds
When you decide to invest in the power transition, green energy mutual funds are a great starting point. These funds pool money from many investors to buy shares of companies working in solar, wind, and clean technologies. Traditional energy mutual funds usually focus entirely on old oil, gas, and coal companies. In contrast, renewable energy mutual funds specifically look for businesses that want to reduce pollution and build sustainable power.
Sometimes, finding pure clean energy companies in India is tough because the sector is still quite young. So, fund managers often pick energy sector mutual funds that include older power companies actively shifting towards green projects. For example, a big oil company building a massive solar park could easily be included in the portfolio. You might also hear about a renewable energy etf India in the market. An ETF, or exchange-traded fund, is similar to a mutual fund but it trades on the stock market exactly like a regular share. Both of these options let you support the clean power movement while aiming for financial growth.
Best Renewable Energy Mutual Funds
Here is a list of some top funds in this space for 2026. We have compared them based on their category, Net Asset Value (NAV), Assets Under Management (AUM), past returns, and expense ratio.
| Fund Name | Category | NAV | AUM (Crores) | Expense Ratio(%) |
|---|---|---|---|---|
| SBI Energy Opportunities | Equity Thematic | ₹11.60 | ₹8,918 | 0.67 |
| ICICI Prudential Energy Opportunities | Equity Thematic | ₹11.79 | ₹8,851 | 0.55 |
| Nippon India Power & Infra | Equity Sectoral | ₹411.96 | ₹7,707 | 0.82 |
| DSP Natural Resources & New Energy | Equity Thematic | ₹124.92 | ₹2,342 | 2.13 |
| Tata Resources & Energy | Equity Thematic | ₹58.32 | ₹1,343 | 0.60 |
| Kotak Energy Opportunities | Equity Thematic | ₹10.82 | ₹276 | 0.79 |
Overview of Best Renewable Energy Mutual Funds
Let us look at these specific funds in a bit more detail.
1. SBI Energy Opportunities Fund
Launched recently in early 2024, this fund quickly became very popular among investors. It currently manages a massive ₹8,918 Crores. Because it is so new, we do not have long-term return data yet.
However, it charges a competitive expense ratio of 0.79%. It invests heavily in companies like Reliance and ONGC that are building massive new green infrastructure. This is a good option if you trust big, established companies.
| Fund Name | 1 Year Return | 3 Year Return | 5 Year Return |
|---|---|---|---|
| SBI Energy Opportunities | 7.96% | N/A | N/A |
2. ICICI Prudential Energy Opportunities Fund
This is another new fund from 2024 that has performed very well in its first year. It gave an impressive one-year return of over 15%. The most attractive feature is its very low expense ratio of 0.54% to 0.65%.
The fund invests across 85 different stocks, offering very good variety. It even includes equipment makers that supply parts for clean energy projects. This wide variety helps lower the risk a little bit.
| Fund Name | 1 Year Return | 3 Year Return | 5 Year Return |
|---|---|---|---|
| ICICI Pru Energy Opportunities | 15.67% | N/A | N/A |
3. Nippon India Power & Infra Fund
This fund is a popular choice for investors looking at the power and infrastructure sectors. It manages a very large pool of money, around ₹7,707 Crores. The fund has delivered a strong 26.20% return over the past three years.
It invests in big companies like Reliance Industries and NTPC, along with specific green firms like NTPC Green Energy Ltd. The expense ratio is decent, making it a fair choice for long-term holders. This mix of old and new energy helps balance the fund.
| Fund Name | 1 Year Return | 3 Year Return | 5 Year Return |
|---|---|---|---|
| Nippon India Power & Infra | 8.54% | 26.20% | 24.40% |
4. DSP Natural Resources and New Energy Fund
This fund offers a unique twist by investing a part of its money in international clean energy funds. It has given a very solid 25.60% return over the past three years. The direct plan has an expense ratio of 0.72%, which is quite reasonable.
The portfolio heavily leans on large Indian companies but adds a global flavor to balance the risks. This global exposure is a nice feature for investors wanting a broader reach.
| Fund Name | 1 Year Return | 3 Year Return | 5 Year Return |
|---|---|---|---|
| DSP Natural Res & New Energy | 28.79% | 25.60% | 18.30% |
5. Tata Resources & Energy Fund
The Tata Resources & Energy Fund focuses on natural resources and the broader energy market. It balances its investments carefully between older commodity businesses and new renewable ventures. With an AUM of ₹1,343 Crores, it is smaller but very efficient.
The fund charges a low expense ratio of around 0.60% to 0.70% for its direct plan. This low fee helps you keep more of your returns over the years. It has given a solid 13.60% return in the last one year.
| Fund Name | 1 Year Return | 3 Year Return | 5 Year Return |
|---|---|---|---|
| Tata Resources & Energy | 13.95% | 20.52% | 15.50% |
6. Kotak Energy Opportunities Fund
This fund is smaller and newer, with an AUM of around ₹276 Crores. It looks for hidden chances in both traditional and sustainable power companies. The expense ratio is around 0.90% for the direct plan.
Interestingly, it holds shares in pure solar companies like Waaree Energies and Vikram Solar. This makes it a nice option if you want to directly support solar growth in India.
| Fund Name | 1 Year Return | 3 Year Return | 5 Year Return |
|---|---|---|---|
| Kotak Energy Opportunities | 6.63% | N/A | N/A |
Read Also: How to Build a Mutual Fund Portfolio
Who should invest in Renewable Energy Mutual funds
Here is a quick look at who these funds are best suited for:
- High-Risk Takers: These funds are officially marked as “Very High Risk” by market regulators. You must have a strong stomach for sudden market ups and downs.
- Long-Term Investors: The shift to green power takes time. You need a long investment horizon of five to ten years to see meaningful growth.
- ESG Focused Investors: Mutual funds focused on renewable energy might be suitable for investors aiming for sustained capital appreciation alongside a commitment to environmental, social, and governance (ESG) values.
Factors to Consider Before Investing in a Renewable Energy Mutual Funds
Keep these below mentioned point in mind before investing in energy mutual funds
- Analysis of expense ratio: Always check the yearly fee the fund charges. Direct plans have lower fees than regular plans. A lower fee means you take home more profits in the long run.
- Size of the fund : Some funds have a long track record, while others are very new. A larger AUM often means more people trust the fund, but a good track record proves the fund manager’s skill.
- Understand the Holdings: See what stocks the fund actually buys. Some funds buy pure green companies, while others buy older oil and coal companies that are slowly turning green. Make sure this matches your goals.
- Review the Exit Load: Mutual Funds charge a small fee if you pull your money out too early, like within 30 or 90 days. Be sure you know this rule so you do not lose money unnecessarily.
Advantages of Investing in Renewable Energy Mutual Funds
Here is what makes this sector worth your attention:
- Massive energy demand: India is growing fast, and our need for power is only going up. Since electricity is a non-negotiable part of daily life.
- Solid potential for wealth creation: We are looking at a permanent shift in how power is generated. Backing this transition gives investors a strong chance to build real wealth over the next decade.
- Heavy government backing: The push for green energy has serious momentum from the government. With subsidies and tax breaks flowing into the sector, renewable companies have a clear runway for faster growth and lower risks.
- Investing with a purpose: Beyond just making money, you are putting your capital to work for a cleaner environment.
Read Also: Best Thematic Mutual Funds in India
Disadvantages of Investing in Renewable Energy Mutual Funds
There are a few important risks to keep in mind before investing. Here is what you need to watch out for:
- Policy Dependence: These funds rely heavily on friendly government rules. A sudden stop in subsidies can easily hurt company profits.
- High Material Costs: Green energy projects need raw materials like copper and aluminum. If these material prices shoot up, building costs will increase.
- Lack of Diversification: As sectoral funds, they focus on just one area. If the energy sector struggles, your investment will directly drop in value.
- High Volatility: Without other sectors like banking or IT to balance the risk, these funds can face sharp ups and downs over short periods.
How to Invest in Renewable Energy Mutual Funds
Starting your investment journey in these funds is quite simple today. Here are the simple steps and options available to you:
- Open a Demat Account: You can easily invest using Pocketful. Open a trading account on this platform and It offers a smooth platform where you can track funds, compare fees, and execute orders with zero brokerage charges.
- Selection of fund: Find the renewable energy mutual fund select the fund of your choice.
- Lump Sum Investment or SIP: You can choose to invest a large amount of money all at once if you have spare cash available or a fixed amount every month. You can start with just ₹100 or ₹500.
- Track & Review your Investment: After doing the investment Track your Funds Performance, Evaluate Returns & Policy Changes.
Taxation on Renewable Energy Mutual Funds
When you make a profit on your mutual funds, the government charges a tax. Since these funds invest mostly in the stock market, they follow the equity taxation rules. The rules for 2026 are quite straightforward and easy to understand.
If you sell your units within 12 months, it is called a Short-Term Capital Gain. You will have to pay a flat 20% tax on this quick profit. If you hold your investment for more than 12 months, it becomes a Long-Term Capital Gain and will be taxed at 12.5%.
Conclusion
Renewable energy is not just about the investment rather it is the future of energy. To gain advantage in this market the Indian government supported the companies providing subsidies and investors in simple taxation on investment of mutual funds.
Apps like pocketful help you to invest in these mutual funds with zero brokerage and zero account opening fees. It also has ready made pockets like renewable energy where a beginner can invest without having advanced knowledge.
Frequently Asked Questions (FAQs)
Which is the best renewable energy mutual fund in India?
None of the mutual funds emerges as the best mutual fund for renewable energy investments. The mutual funds that could be considered on the basis of their investment goals and risk appetite could include – SBI Energy Opportunities Fund, ICICI Prudential Energy Opportunities Fund, and DSP Natural Resources & New Energy Fund.
Which mutual funds invest in solar energy stocks in India?
Several energy-focused mutual funds invest in solar energy companies alongside power, utilities, and other businesses benefiting from India’s clean-energy transition.
What is the minimum SIP amount for renewable energy funds?
Most renewable energy mutual funds allow SIP investments starting from ₹100 or ₹500, making them easy for a wide range of investors.
What is the difference between energy funds and renewable energy funds?
Energy funds invest in oil, gas, power and utilities. Renewable energy funds invest mainly in solar, wind and clean-energy companies.
Can I invest in renewable energy mutual funds through SIP?
Yes, you an invest in Renewable energy fund through SIP, it’s a best way to invest for Long term Horizon.
