Mutual Funds: Manufacturing, infrastructure best-performing themes in 2024

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Sectoral/thematic  mutual funds collected a whopping Rs 1,09,711 crore in 2024, accounting for 34 per cent  of total net collections by the industry. Notably, thematic funds witnessed a remarkable 488% growth in net collections from 2023 to 2024, said a study by Ventura Securities.

 

Under sectorial and thematic schemes, Business Cycle Funds net collection stood at Rs 6,841 crore in 2024 from Rs 103 crore in 2023. Energy sector collected Rs 23,964 in 2024 crore as compared to Rs 470 crore in 2023.

 

Of the total net collection in sectoral and thematic funds in 2024, Manufacturing, Infrastructure, & Energy together contributed 56%, followed by 9% by FMCG, 6% in Business Cycle and 5% in PSU.

 

The net collections under Large caps stood at Rs 17,404 crore in 2024 compared to Rs -3,768 crore in 2023.  Net Collections under Multi caps & Flexicap stood at Rs 37,649 crores and Rs. 36,231 crore, respectively in CY 2024.

 

The Net Collections under small caps dipped to Rs 29,555 crore in 2024 compared to Rs  45,270 crore in 2023.

 

Category Average Performance

 

All categories achieved double-digit, positive returns for the second consecutive year. In 2023, PSU led with the highest return of 56.1%, while Banking & Financials recorded the lowest at 20.7%. In 2024, Pharma topped the list with a 40.5% return, whereas Banking & Financial Services had the lowest at 11.5%. Over a 5-year average, Technology and Small Cap funds outperformed, while Banking and Large Cap funds lagged. ELSS funds also averaged an impressive 20% annual return over 5 years, making them a strong option for tax-saving investments. The average returns, which stood at 32.3% in 2023, have moderated to 22.6% in 2024.  Category-wise Net Collections 

 

 Category-wise Schemes that have outperformed their Benchmark

 

Broad categories have outperformed in comparison to 2023, with the primary outperformance seen in sectoral and thematic funds. Small caps have underperformed relative to large and mid-caps, this trend is reflected in the category's performance.

 

AMC Schemes that have outperformed the Benchmark

 

Larger AMCs are underperforming their benchmarks, possibly due to managing larger corpus and a higher number of schemes. In contrast, smaller AMCs have shown a better track record. ICICI and Aditya Birla have the highest number of schemes in their portfolio.  % of AMCs schemes that have outperformed their benchmarks 

 

Foreign investment flow

 

In 2024, FIIs registered a net equity outflow of Rs 3.04 lakh crore, with September showing the highest inflow and October the highest outflow of Rs 1.14 lakh crore. There were only 4 months of inflows, compared to 6 in 2023, resulting in net FII outflows in both years.

 

Domestic Investment Flow

 

DIIs recorded a net equity inflow of Rs 5.27 lakh crore, with October 2024 seeing the highest inflow of Rs 1.07 lakh crore. DII net equity inflows nearly tripled compared to 2023. Despite FIIs' high outflow in October, DIIs helped balance the situation with their record equity inflow for the month. 

 

Indices performance

Private sector banks underperformed in 2023 and 2024, delivering just a 0.4% return in 2024. Energy saw a huge drop from 30.6% in 2023 to 6.5% in 2024, while FMCG declined sharply from 30.8% in 2023 to 1.5% in 2024. Defense led as the top-performing index in 2024 with a 56.5% gain and remained in the top 5 since 2023. Small cap also consistently ranked in the top 5 for both years, with none of the indices ending in negative territory for the second consecutive year.