 "SBI contra to Parag Parikh Flexi Cap Fund: Most popular equity MFs of 2024")
In a year marked by volatility, sectoral and thematic funds have emerged as the clear winners in the mutual fund category, capturing investor attention and substantial net inflows. These funds, which focus on specific industries or investment themes, capitalized on market trends and investor sentiment, demonstrating resilience in the face of economic uncertainty. Data analysed by Value Research shows thematic funds captured 28 per cent of the total inflows this year. In simple terms, Rs 28 of the Rs 100 invested by an investor this year has either been in a sectoral or a thematic fund. "Of the 154 (data available as of November 25, 202) new schemes, 90 are passive funds. These have collectively raised about Rs 96,550 crore, with the HDFC Manufacturing Fundleading the charge at Rs 9,560 crore (nearly 10 per cent of the total NFO collections). ICICI Prudential Energy Opportunities and SBI Innovative Opportunities have also ridden the wave of investor enthusiasm,"noted Value Research."
Investors gravitated toward funds that promised targeted exposure to growth sectors, such as technology and renewable energy. This shift reflects a broader trend in the investment landscape, where strategic positioning in high-potential areas has proven to be a winning strategy.Conversely, certain categories struggled to attract investments, with traditional large-cap and value funds facing declines in net flows. Market conditions, combined with a preference for more dynamic investment strategies, contributed to this trend. Many investors sought out funds that not only promised returns but also aligned with emerging market narratives, leaving traditional fund managers to reassess their strategies.
Category losers
Value Research notes that 2024 has been a year to forget for focused funds. In fact, it is the only category that has shrunk in size due to heavy outflows.
Solution-oriented funds, such as children's funds and retirement funds, got few takers as well, while tax-saving funds (also known by their acronym, ELSS) have continued to be largely ignored, ever since the new tax regime in 2023 disincentivised people from investing in tax-saving options.
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The winning funds
For the second consecutive year, Parag Parikh Flexi Cap Fund has stood at the top spot.
After years of playing the bridesmaid—third in 2021 and 2022—it has doubled-down as being the most popular mutual fund in the category. Its net inflows have soared 76 per cent to Rs 20,020 crore, while it has given a year-to-date return of 27 per cent as of December 15, 2024, comfortably ahead of BSE 500 TRI's 21 per cent.,"said Karan Jaiswal of Value Research.