Popular Equity Mutual Funds 2024: Parag Parikh Flexi Cap Fund and SBI Contra Topped the Chart Amid Market Volatility
The equity mutual fund market is now dominated by sectoral and thematic funds as they get a lot of inflows due to investors’ preferences for fast-growing sectors.
Given the overall volatility in the markets, these focused funds on either specific industries or investment themes leveraged the extant market momentum and investor emotion well to tide over the adverse economic environment.
According to the Report, thematic funds captured 28% of the total inflows in 2024. In other words, for every Rs.100 invested by individuals this year, Rs.28 went into sectoral or thematic funds. Of the 154 new schemes launched (as of November 25, 2024), 90 were passive funds. These passive funds garnered a total of Rs.96,550 crore, with the HDFC Manufacturing Fund being at the forefront, garnering Rs.9,560 crore and accounting for almost 10% of the overall NFO collections. Other funds, such as ICICI Prudential Energy Opportunities and SBI Innovative Opportunities, also saw the spillover of the investor fervour that was going into these thematic and sector-specific strategies.
Investor attention began to focus more on funds with exposure to potential growth sectors like technology and renewable energy. This fact points to increasing demand for a dynamic investment approach that promises returns in emerging industry sectors. Thus, as the investors increasingly became focused on opportunities, large-cap and value funds found it tough to attract any inflows, and many fund managers were challenged to reorient their existing approaches.
On the other hand, some fund categories faced struggles in 2024. The report says focused funds were particularly the ones that saw a decline due to very high outflows. Even solution-based funds like children’s or retirement funds witnessed the least interest also.
More so, tax-saving funds or ELSS, have continued to lose popularity since the new tax regime was introduced in 2023. This reduced the attractiveness of savings in tax-saving schemes.
Parag Parikh Flexi Cap Fund emerged as the most popular one in mutual fund categories for the second successive year. While its net inflow jumped by a staggering 76% to Rs.20,020 crore after gaining third place in both the years 2021 and 2022. Till December 15, 2024, it was recording a year-to-date return of 27% compared to 21% in the same period from the BSE 500 TRI. This remarkable performance underscores the fund’s growing appeal to investors, establishing it as a leading choice in the equity mutual fund category.
