Money magnets of 2024

As 2024 comes to a close, it's the perfect time for a year-end review. And so, here we are, unfolding our Excels, diving into sheets of data, burning the midnight oil and picking up our green and red markers to highlight the winners and losers of the mutual fund industry this year.

To uncover these trends, we analysed the net flows of open-end equity funds based on daily AUM and NAV disclosures.

Let's start with which fund categories were the most popular.

Category winners

It's not surprising that sectoral and thematic funds have emerged as the biggest winners of this year. They have captured 28 per cent of the total inflows this year. In simple terms, Rs 28 of the Rs 100 invested by an investor this year has either been in a sectoral or a thematic fund.

Following closely are passive funds and multi-cap funds.

Category losers

2024 has been a year to forget for focused funds. In fact, it is the only category that has shrunk in size due to heavy outflows.

Solution-oriented funds, such as children's funds and retirement funds, got few takers as well, while tax-saving funds (also known by their acronym, ELSS) have continued to be largely ignored, ever since the new tax regime in 2023 disincentivised people from investing in tax-saving options.

The winning funds

Now, let's look at the most popular mutual funds.

For the second consecutive year, Parag Parikh Flexi Cap Fund has stood at the top spot.

After years of playing the bridesmaid—third in 2021 and 2022—it has doubled-down as being the most popular mutual fund in the category. Its net inflows have soared 76 per cent to Rs 20,020 crore, while it has given a year-to-date return of 27 per cent as of December 15, 2024, comfortably ahead of BSE 500 TRI's 21 per cent.

Meanwhile, SBI Contra Fund has quietly built on its second-place legacy, with Rs 15,630 crore in net inflows and a return of 24 per cent.

A few ETFs are in the top-10 list as well. That's because the Employees' Provident Fund Organisation (EPFO) invested Rs 34,208 crore into some of the ETFs between April and October 2024.

Three sectoral funds have also made waves this year, reflecting investors' growing appetite for focused, high-risk bets.

In fact, there should be a special mention of the new funds that have been launched this year.

Of the 154 (data available as of November 25, 202) new schemes, 90 are passive funds. These have collectively raised about Rs 96,550 crore, with the HDFC Manufacturing Fundleading the charge at Rs 9,560 crore (nearly 10 per cent of the total NFO collections), thanks to its strong bank-led distribution. ICICI Prudential Energy Opportunities and SBI Innovative Opportunities have also ridden the wave of investor enthusiasm.

Even niche sectoral themes have shone brightly, thanks to SBI Energy Opportunities Fund receiving an additional Rs 3,960 crore from investors, on top of its NFO collection of Rs 6,560 crore. However, its single-digit returns of just 8 per cent since its launch remain discouraging.

The comeback fund

We should mention Motilal Oswal Flexi Cap Fund for their strong bounceback, too.

It has gone from being a dud fund to a stud fund in 2024, as it has delivered a staggering 50 per cent return this year as of December 15, 2024, easily surpassing the BSE 500's 21 per cent.

The forgettable funds

The house of Axis has continued to struggle, with three of its funds—Axis Bluechip, Axis ELSS Tax Saver, and Axis Focused 25—once again finding themselves among the bottom ten.

Together, these funds witnessed outflows of about Rs 11,730 crore. While they've improved their performance enough to climb out of the bottom quartile they occupied in 2023, it hasn't been sufficient to restore investor confidence.

The focused fund category, despite its promise of concentrated picks by top fund managers, has also disappointed investors. Mirae Focused Fund, SBI Focused and Axis Focused have all found themselves in the bottom rankings.

Then there's the curious case of CPSE ETF, a thematic PSU-focused ETF. Despite delivering an eye-popping 75 per cent return in 2023 and a healthy 32 per cent this year, it hasn't stopped investors from exiting the fund.

The most popular fund houses

ICICI Prudential AMC has dethroned HDFC AMC to take the crown in 2024, gathering about Rs 86,110 crore of investors' money across 84 schemes.

SBI's AMC rose to second position, driven by its blockbuster NFOs (new fund offers) and strong inflows in its contra fund.

HDFC's AMC, meanwhile, fell from last year's top spot to fourth.

The least popular fund houses

At the other side of the spectrum, Axis Mutual Fund retained its least-favoured status despite narrowing its net outflows to about Rs 5,440 crore in 2024 from a staggering Rs 17,100 crore in 2023.

As we sign off, let's talk about the rise and rise of passive funds. Growing from 320 to 413 schemes this year, they have garnered Rs 2.3 lakh crore to their asset base, capturing 22 per cent of the total equity fund market (as of November 2024).

Despite this, active funds have stood their ground, accumulating Rs 9 lakh crore in assets under management and reaching an asset base of Rs 31 lakh crore.

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