2024 has been a remarkable year for the Indian Mutual Fund (MF) industry, which saw tremendous growth, with Assets Under Management. The AUM touched ₹68,08,101 crore by November 30, as per AMFI data release. This growth story is even more impressive when you consider that, just a decade ago, the AUM stood at ₹10.90 trillion—an increase of over six times in just 10 years.
This remarkable growth in AUM highlights the growing confidence of investors to invest in the equity market, with equity mutual funds emerging as a popular choice. As of November 30, 2024, the number of folios under Equity, Hybrid, and Solution-Oriented Schemes, with the majority of investments coming from the retail segment, stood at approximately 17.55 crore.
So, what exactly shaped this extraordinary demand for the mutual fund industry in 2024?
Let’s take a closer look at which equity mutual funds performed better and explore the factors behind their success in 2024.
| Name | Sub Category | AUM (₹ Cr) | Absolute Returns – 1Y (%) | Maximum Drawdown (%) | CAGR 3Y (%) |
| Motilal Oswal Midcap Fund | Mid Cap Fund | 22,897.62 | 64.23 | 37.23 | 37.15 |
| LIC MF Infra Fund | Sectoral Fund – Infrastructure | 852.07 | 61.73 | 39.58 | 34.6 |
| HDFC Defence Fund | Thematic Fund | 4,609.59 | 59.28 | 19.27 | – |
| Bandhan Small Cap Fund | Small Cap Fund | 9,248.28 | 59.06 | 24.34 | 31.84 |
| Motilal Oswal ELSS Tax Saver Fund | Equity Linked Savings Scheme (ELSS) | 4,186.93 | 57.6 | 37.72 | 29.33 |
| Invesco India Focused Fund | Focused Fund | 3,443.24 | 54.28 | 21.98 | 23.6 |
| HDFC Pharma and Healthcare Fund | Sectoral Fund – Pharma & Health Care | 1,459.59 | 54.1 | 5.8 | – |
| Motilal Oswal Flexi Cap Fund | Flexi Cap Fund | 12,598.45 | 53.23 | 37.1 | 23.96 |
| Bandhan Infrastructure Fund | Sectoral Fund – Infrastructure | 1,798.34 | 52.9 | 56.87 | 31.72 |
| Motilal Oswal Large & Midcap Fund | Large & Mid Cap Fund | 7,710.01 | 52.58 | 37.44 | 29.26 |
| Invesco India Midcap Fund | Mid Cap Fund | 5,624.96 | 50.96 | 34.09 | 26.79 |
| Canara Rob Infrastructure Fund | Sectoral Fund – Infrastructure | 848.06 | 50.68 | 44.07 | 31.02 |
| LIC MF Healthcare Fund | Sectoral Fund – Pharma & Health Care | 80.86 | 50 | 22.23 | 19.64 |
| ICICI Pru Pharma Healthcare & Diagnostics Fund | Sectoral Fund – Pharma & Health Care | 5,044.63 | 49.89 | 20.58 | 25.69 |
| Edelweiss Mid Cap Fund | Mid Cap Fund | 8,280.35 | 49.77 | 39.21 | 28.17 |
Note: The above list of equity mutual funds is sorted based on their 1-year absolute return as of December 11, 2024, and the data is sourced from Tickertape Mutual Fund Screener.
Among the standout performers, mid-cap and small-cap mutual funds surged ahead, fueled by strong company performances and optimism surrounding the Indian economy’s recovery.
The Motilal Oswal Midcap Fund, a heavy hitter in the mid-cap segment, posted an outstanding 64.23% year-to-date return, as of December 11, 2024, a stellar achievement that was underpinned by a remarkable 37.15% compound annual growth rate (CAGR) over the last 3 years.
Similarly, Bandhan Small Cap Fund also made waves in the small-cap space with a 59.06% return, showcasing the potential for high growth in the smaller stocks, despite the inherent risk. With a 31.84% CAGR over 3 years and a maximum drawdown of 24.34%.
Over the past year, small-cap indices like the Nifty Smallcap 50 gave a 42.29% return and have demonstrated strong growth, showcasing the potential of these companies to outperform in a bull market. The Nifty 50 recorded a 45.37% return for the year showcasing its strong resilience and stability.
2024 also witnessed a solid rise in thematic and sectoral funds, particularly those focused on infrastructure, healthcare, and defence.
The LIC MF Infra Fund capitalised on the infrastructure boom, delivering a 61.73% YTD return. Likewise, the HDFC Defence Fund joined the party with impressive gains of 59.28%, driven by a surge in defence sector stocks as global tensions and government spending in defence ramped up.
Pharma-focused funds like the ICICI Pru Pharma Healthcare & Diagnostics Fund also saw strong growth, with 49.89% returns, benefiting from the increasing demand for healthcare and pharmaceutical stocks amidst global health trends.
In 2024, two key sectors—defence and pharmaceuticals—played a major role in driving investor interest in equity funds, offering strong growth and stability amidst market fluctuations.
The defence sector experienced a surge in investment, fueled by the government’s strategic focus and record budget allocation of approximately USD 75 billion for FY 2024-25.
This funding, along with a remarkable 32.5% growth in defence exports underscored India’s expanding global role and bolstered confidence in the sector. This optimism translated into strong performance for sector-specific funds such as the HDFC Defence Fund.
Similarly, India’s pharmaceutical sector saw impressive growth in 2024, with exports increasing by 8.36%, reaching $2.31 billion in July 2024. With a 10-12% growth rate forecasted the sector is set to reach $100 billion by 2025, attracting investors to pharma-focused equity funds.
Rising inflation and higher interest rates were significant headwinds for equity funds in 2024. This kept the real estate and consumer goods sector under pressure throughout the year. As a result, many equity funds with large allocations to these sectors underperformed.
Funds with heavy exposure to real estate stocks saw limited growth, as the sector lagged behind with modest returns.
One of the key challenges for equity funds was the significant outflow of Foreign Institutional Investors (FII) from Indian markets in 2024. As of November 20 2024, FIIs have been net sellers at ₹15,827 crore from being net buyers of Indian equities till September.
In 2024, the Information Technology (IT) sector faced significant headwinds, primarily driven by a global slowdown in demand and margin pressures.
As a result, ICICI Prudential Technology Fund, which had strong exposure to IT stocks, experienced a challenging year, posting a return of -7.56% over the past 12 months. The fund focused on the technology sector, struggled to generate positive returns due to weak performance across key tech stocks.
On the other hand, the Consumer Goods sector demonstrated resilience despite economic pressures. While the sector did face challenges such as inflationary pressures and a slowdown in consumer spending, it benefited from stable demand for essential products. Nippon India Consumption Fund, with a focus on consumption-driven stocks, capitalised on this stability, delivering a solid return of 18.56% over the year.
Looking ahead to 2025, equity funds are expected to remain a key investment choice for investors seeking long-term growth and capital appreciation. With India’s higher expenditure plans in select sectors, and increasing retail participation in the equity market, 2025 is likely to be a good year for mutual funds.
However, inflationary pressures, growth concerns and market volatility could create challenges for investors, impacting returns in the short term.
The year 2024 turned out to be a year of opportunities for equity mutual funds, particularly those that focused on mid-cap, small-cap, and sectoral themes. However, market volatility and drawdowns reminded investors of the risks involved in the equity market. Yet, with patience and strategic investment, equity funds delivered rewarding results for those who stayed the course. As we close out the year, 2024 proves that equity mutual funds remain an essential tool for long-term investors looking to navigate the ever-changing financial landscape.
Ready to watch your savings grow? Try our SIP Plan Calculator today and unlock the potential of disciplined investing. Perfect for planning your financial future. Start now!
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.
We're Live on WhatsApp! Join our channel for market insights & updates
Get the link to download the App
