Energy, manufacturing & infrastructure themes accounted 12% of total MF industry inflows in 2024: Ventura Securities

According to the latest report by Venture Securities, energy, manufacturing and infrastructure themes accounted for 12% of total inflows in the mutual fund industry in 2024. The report also found that while small caps registered a decline in collections, flexi-cap and multi-cap funds saw significant growth last year.

According to the report, sectoral/thematic funds collected Rs 1.09 lakh crore, which is 34% of total net collections. Notably, thematic funds witnessed a remarkable 488% growth in net collections from 2023 to 2024. Of the total net collection in sectoral and thematic funds in 2024, manufacturing, infrastructure and energy combined contributed 56%, followed by FMCG (9%), business cycle (6%) and PSU (5%).

Under sectoral and thematic schemes, net collection in business cycle funds stood at Rs 6,841 crore in 2024 from Rs 103 crore in 2023, while the energy sector collected Rs 23,964 crore in 2024 compared to Rs 470 crore in 2023.

Net collections under large caps stood at Rs 17,404 crore in 2024 compared to Rs 3,768 crore in 2023. Net collections under multicaps and flexicaps stood at Rs 37,649 crore and Rs 36,231 crore, respectively in CY2024. However, net collections under smallcaps dipped to Rs 29,555 crore in 2024 compared to Rs 45,270 crore in 2023.

In 2024, FIIs registered a net equity outflow of Rs 3.04 lakh crore with October recording the highest outflow at Rs 1.14 lakh crore, while September saw the highest inflow. There were only four months of inflows compared to six months in 2023 resulting in net FII outflows in both years.

DIIs recorded a net equity inflow of Rs 5.27 lakh crore with October 2024 seeing the highest inflow of Rs1.07 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, as per the report.

Talking about the indices performance, defence led as the top-performing index in 2024 with a 56.5% gain and remained in the Top 5 since 2023, the small-cap segment also consistently ranked in the Top 5 for both years. Private sector banks underperformed in 2023 and 2024, delivering just a 0.4% return in 2024. Energy also saw a massive fall from 30.6% in 2023 to just 6.5% in 2024, while FMCG nosedived sharply from 30.8% in 2023 to a mere 1.5% in 2024.

In the category-wise 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 a 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.