Which MFs should you bet on? Infra, tech sectoral funds to do well in 2025

Renewable energy, infrastructure, and technology-focused funds could deliver strong returns in 2025.

As we look ahead to 2025, investors are eager to identify the mutual funds that promise the best returns.  Narinder Wadhwa, Managing Director & CEO of SKI Capital, suggests that sectors such as renewable energy, technology, and banking will shine, driven by economic recovery and government initiatives.  

Narinder Wadhwa, Managing Director & CEO of SKI Capital, a Sebi-registered AIF explains what your 2025 investment strategy should be: 

 

SIPs (Systematic Investment Plans):

Continue or start SIPs in diversified equity funds to benefit from rupee cost averaging, especially in a volatile market. 

Recommendations:

Diversification:

Spread investments across equity, debt, and alternative assets like gold or REITs for balanced risk and returns.

 

 

Rebalancing:

Review and rebalance your portfolio periodically to align with changing market conditions.

 

Risk Management:

Maintain an emergency fund and avoid overexposure to high-risk assets.

 

What are the key trends shaping the investment landscape in 2025?

 

A: According to Narinder Wadhwa, global central banks, including the RBI and the U.S. Federal Reserve, are expected to adopt more accommodative monetary policies as inflation cools, potentially leading to rate cuts. Meanwhile, geopolitical tensions may persist but could ease with declining energy prices, boosting investor confidence.

 

Q: What does the economic outlook for India look like?

 

A: After a challenging 2024, India’s GDP growth is anticipated to rebound in 2025, driven by increased government spending, private capital expenditure, and a recovery in consumption. This improvement, alongside a clearer global economic outlook, is expected to attract foreign portfolio investments, particularly in growth-oriented sectors.

 

Q: Which sectors are expected to perform well in 2025?

 

A: Several sectors are poised for strong performance:

 

Renewable Energy and Electric Vehicles (EVs): Supported by government incentives and a global shift toward sustainable energy. 

Technology and IT Services: Continued demand for AI and automation will fuel growth in this sector.

Banking and Financial Services: Lower interest rates and improved credit demand will benefit this sector significantly.

Infrastructure and Real Estate: Government initiatives and urbanization trends are likely to spur growth.

Pharmaceuticals and Healthcare: A focus on research and development and exports will bolster this sector's performance. 

Q: Are there any sectors that investors should approach with caution?

 

A: Yes, investors should be wary of certain sectors:

 

• Commodities: Fears of a global slowdown may suppress demand in this area.
• High-Leverage Companies: Companies with significant debt may face challenges.
• Traditional Automotive: The slow adoption of EVs could hinder legacy automakers.

Q: What mutual fund strategies are recommended for 2025?

 

A: Equity Mutual Funds:

 

• Large-Cap Funds are advisable for stability during volatile periods.
• Mid- and Small-Cap Funds should be selected based on proven track records, benefiting from domestic growth.
• Thematic Funds focused on renewable energy, infrastructure, and technology may offer strong returns.
• Debt Mutual Funds:

 

• Long-Duration Funds are attractive in a declining interest rate environment, particularly gilt and high-credit corporate bond funds.
• Dynamic Bond Funds offer flexibility in adapting to changing interest rates.
• Short-Term Funds remain a safe choice for stable returns.
• Hybrid Funds: Balanced Advantage or Aggressive Hybrid Funds can provide a mix of stability and growth for moderately risk-averse investors.

 

Q: What investment strategies should investors consider?

 

A: Diversification across equity, debt, and alternative assets like gold or REITs is crucial for balanced risk and returns.

Rebalancing portfolios periodically will help align with changing market conditions. 

Risk Management is vital; maintaining an emergency fund and avoiding overexposure to high-risk assets is recommended.