Are you missing out?
India’s rapid manufacturing push is prompting fund houses to increasingly offer manufacturing-focused thematic funds.
Interestingly, over half of the Rs 10,500 crore AUM of these funds are managed by just 3 actively-managed schemes floated in the past one year.
Passive funds’ performance can be gauged from the BSE Manufacturing Index. It underperformed the broader market 77% of the time in the last 5 years.
We looked for schemes more than a year old and found only two–Aditya Birla Sun Life (ABSL) Manufacturing Equity Fund & ICICI Prudential Manufacturing Fund.
We put these against flagship equity funds of their AMCs – ABSL Frontline Equity & ICICI Value Discovery. Both manufacturing funds outdid the flagship funds on a 5-year basis.
However, this was only because 2023 was an outlier year, where the two manufacturing funds did exceptionally well in line with the overall market.
Prior to 2023, the two funds trailed the flagship funds. For instance, the ABSL Manufacturing Fund returned 11% per year vs its flagship fund's 14% gains during 2019-2022.
Given their 5-year returns are bumped up only due to the gains in 2023, it would be problematic to declare them as winners.
So, we further compared manufacturing stocks present in both the standalone funds & the flagship equity funds. To see our results, head on to the full story from the link below.