By Vineet Kumar 
All-Round Mutual Fund Performance in 2024: Defence, Mid-Cap, Long-Duration, and Silver Funds Shine
The year 2024 proved to be an exceptional year for mutual fund investors across asset classes—equities, debt, and commodities. The Indian mutual fund industry recorded robust growth in assets under management (AUM), with a 39% surge from ₹49 lakh crore in November 2023 to ₹68 lakh crore by the end of November 2024.
Equity Mutual Funds: Midcaps and Smallcaps Outperform
In the diversified equity funds category, mid-cap and small-cap funds emerged as clear winners, leaving large-cap funds lagging behind. Sectoral funds, particularly pharma, infrastructure, and PSU themes, stole the limelight, while MNC-focused funds underperformed.
Vivek Sharma, Investment Head at Estee Advisors, highlighted the growing retail participation in equity mutual funds through SIPs (systematic investment plans), reflecting growing investor confidence. Equity-oriented schemes experienced nearly a 50% rise in AUM, touching ₹30 lakh crore in 2024, with inflows exceeding ₹3.5 lakh crore.
Top Performing Equity Funds in 2024:
Mirae Asset NYSE FANG+ ETF Fund of Fund
Mirae Asset S&P 500 Top 50 ETF Fund of Fund
Motilal Oswal Midcap Fund
LIC MF Infrastructure Fund
Bandhan Small Cap Fund
Sectoral/Thematic Funds: Defence Leads the Pack
Sectoral and thematic funds gained immense popularity in 2024, with their AUM jumping 90% to ₹1.4 lakh crore. Defence funds emerged as the top performer, delivering a stellar 47.7% YTD return, driven by HDFC Defence Fund, the sole active player in this segment. All thematic categories posted over 20% YTD returns, underscoring their robust performance.
Juzer Gabajiwala, Director at Ventura Securities, noted that themes such as business cycles and manufacturing resonated well with investors.
Debt Mutual Funds: Long Duration Steals the Show
The debt fund segment also witnessed significant growth, with AUM touching ₹16.86 lakh crore—a 24% increase. Categories like long-duration funds, dynamic bond funds, and short-term maturity funds benefited from falling bond yields and expectations of rate cuts by the Reserve Bank of India (RBI).
Kaustubh Belapurkar, Director-Manager Research at Morningstar, pointed out that long-duration funds are best-positioned to capitalize on any rate cuts expected in 2025.
Hybrid Funds: Stability Amid Volatility
Hybrid funds saw an unprecedented rise, with AUM crossing ₹8.77 lakh crore, growing by over 41% in a year. Multi-asset allocation funds, with exposure to equities, bonds, and gold, gained investor traction.
Belapurkar emphasized the strong performance of aggressive allocation funds, which benefited from high equity exposure and rising gold prices amidst global geopolitical tensions.
Commodities: Silver Funds Outperform Gold
Precious metals funds stood out in 2024, with silver ETFs delivering 26.8% returns, outperforming gold ETFs, which provided 22% returns. The sharp rise in global gold and silver prices made these funds a compelling choice for diversification.
Since January 2020, gold ETFs have seen net inflows of ₹25,409 crore, indicating a sustained preference for this asset class.
Looking Ahead to 2025
As India’s economy shows signs of cooling and global uncertainties loom, large-cap funds may regain momentum. On the debt front, the RBI’s anticipated rate cuts could further boost long-duration funds, offering opportunities for investors with a higher risk appetite.
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