Mutual Fund Highlights of 2024: Winners and Losers
The mutual fund industry shows big shifts in investor choices, fund strategies, and performance by the end of 2024. An analysis of open-end equity funds shows clear trends that defined the market this year.
The Winning Categories
Sectoral and thematic funds remained the single biggest choice for investors last year, garnering an almost 28% market share of total inflows in 2024. For each Rs.100 invested, the investors put in Rs.28 in these high-risk/high-return funds. Passive or index funds and ETFs also gained well, benefiting from robust institutional support, along with investors’ pursuit of them. Multi-cap, flexi-cap, large and mid-cap topped the rest of the top five categories with steady attractions to diversified strategies.
The Losing Categories
Focused funds were the least popular in 2024, with many investors pulling out their money. Solution-oriented funds, like those for retirement or saving for children’s futures, also didn’t attract much interest. ELSS funds, which are tax-saving options, continued to lose money because the tax benefits were reduced in 2023.
Best Performing Funds
The Parag Parikh Flexi Cap Fund retained its top position for the second consecutive year with net inflows of Rs.20,020 crore and a stellar year-to-date return of 27%, outperforming the BSE 500 TRI’s 21%. Similarly, the SBI Contra Fund secured second place with Rs.15,630 crore in net inflows and delivered 24% returns.
Exchange-traded funds (ETFs) also featured in the list of top funds, with the Employees’ Provident Fund Organisation (EPFO) injecting Rs.34,208 crore into selected ETFs between April and October 2024. The ICICI Prudential Energy Opportunities Fund and SBI Innovative Opportunities Fund also attracted sizeable amounts.
Funds Back in Business
The Motilal Oswal Flexi Cap Fund gained limelight as its remarkable turnaround in 2024 resulted in a mind-boggling 50% return for the year that was much ahead of the benchmark BSE 500 TRI, which gained only 21%. The success also saw the fund redeem investors’ confidence as the fund had been lagging behind earlier.
Funds Falling Behind
Axis Mutual Fund’s offerings continued to face a tough time, with three of its funds—Axis Bluechip Fund, Axis ELSS Tax Saver Fund, and Axis Focused 25 Fund—collectively witnessing outflows of Rs.11,730 crore. The focused category, as a whole, disappointed investors, with Mirae Focused Fund, SBI Focused Fund, and Axis Focused Fund being the least popular. While its 32% returns in this year have been the highest among all, it seems investors are leaving this CPSE ETF, possibly for the thematic PSU focus of this fund.
Fund House Performance
In asset management companies, the leader was ICICI Prudential AMC, which had garnered investments of Rs.86,110 crore in 2024 for its 84 schemes. SBI Mutual Fund climbed to second position with the help of blockbuster NFOs and robust inflows in its contra fund. HDFC Mutual Fund dropped from the top spot to fourth place as investor preferences changed. Axis Mutual Fund stayed the least popular but reduced its outflows to Rs.5,440 crore in 2024, compared to Rs.17,100 crore in 2023.
The Passive Fund Surge
Passive funds grew significantly in 2024, with the number of schemes increasing from 320 to 413. This added Rs.2.3 lakh crore to their total assets, giving them a 22% share of the equity fund market. Most of the new funds were in the thematic and sectoral categories.
Despite the growing interest in passive funds, active funds remained the leaders. Their total assets under management grew to Rs.31 lakh crore, showing that active fund management still plays an important role in creating long-term value for investors.
As 2024 ends, the mutual fund industry shows a mix of new ideas, changing investor choices, and market trends, setting the stage for an exciting 2025.
