As 2024 concludes, mutual funds have been a hot topic for investors, offering a range of opportunities across various categories. From international funds delivering stellar returns to small-cap funds dominating inflows, this year’s trends underscore the dynamic nature of equity markets. Here’s an in-depth analysis of the year’s highlights, expert recommendations, and actionable strategies for 2025. Discover the key mutual fund trends for 2025, from sectoral funds to international ETFs, and learn how to position your investments for long-term growth strategically.
Top-Performing Mutual Funds of 2024
International Funds: Leading the Pack
International funds emerged as the star performers, attracting significant attention from investors.
- Mirae Asset NYSE FANG+ETF FoF: Delivered an impressive 88% return.
- Mirae Asset S&P 500 Top 50 ETF FoF: Yielded a robust 66% return.
- Motilal Oswal Nasdaq 100 FoF: Offered a solid 58% return.
These funds outshined their peers, driven by global market trends and the growing interest in overseas diversification.
Small-Cap Funds: High Returns in 2024
Small-cap funds continued to appeal to investors, offering substantial returns:
- Motilal Oswal Small Cap Fund: Delivered the highest return of 43.17%.
- Bandhan Small Cap Fund: Yielded 40.54%.
- LIC MF Small Cap Fund: Posted a return of 37.51%.
Flexicap Funds: Balancing Growth and Stability
Flexicap funds, with their diversified approach, also performed well:
- Motilal Oswal Flexi Cap Fund: Led the category with a return of 44.63%.
- Invesco India Flexi Cap Fund: Delivered 34.80%.
- JM Flexicap Fund: Returned 33.15%.
Mid-Cap Funds: Outperforming Benchmarks
Mid-cap funds showcased stellar growth:
- Motilal Oswal Midcap Fund: Achieved the highest return of 55%.
- Invesco India Midcap Fund: Delivered 43.20%.
- HSBC Midcap Fund: Posted 38.82%.
Index Funds and ETFs: A Passive Investment Boom
Index funds and ETFs continued to be popular, offering attractive returns:
- Motilal Oswal BSE Healthcare ETF: Provided a 41% return.
- CPSE ETF: Yielded 37.80%.
- Mirae Asset S&P 500 Top 50 ETF: Returned 37.01%.
Expert Recommendations for 2025
Focus on Long-Term Horizons
Investment experts stress the importance of a long-term horizon, particularly for equity mutual funds.
- Vishal Dhawan, CEO of Plan Ahead Wealth Advisors, advises:
- A 7-10 year investment horizon is ideal.
- Use a Systematic Investment Plan (SIP) or Systematic Transfer Plan (STP) strategy to mitigate market volatility.
- Combine flexicap funds, index funds, and international funds for diversification.
Balanced Allocation for Stability
For investors with a moderate risk appetite:
- Krishna Sanghavi, CIO at Mahindra Manulife, recommends hybrid funds, stating:
- Aggressive Hybrid Funds and Multi-Asset Allocation Funds offer a mix of equities, fixed income, and commodities (like gold and silver) for growth and stability.
- Equities provide growth, while fixed income ensures stability.
Cautious Approach to Small-Cap and Mid-Cap Funds
Given the high valuations in small-cap and mid-cap funds:
- Experts caution against chasing past performance.
- A diversified allocation strategy is advisable:
- 80% in domestic mutual funds (flexicap and index funds).
- 20% in international funds for global exposure.
Dynamic and Multi-Asset Funds for Conservative Investors
For conservative investors:
- Nimesh Chandan, CIO at Bajaj Finserv AMC, suggests starting with:
- Dynamically managed Balanced Advantage Funds (BAF).
- Multi-Asset Allocation Funds for equities, fixed income, and commodities.
Strategic Asset Allocation
For a well-rounded portfolio:
- Rahul Singh, CIO – Equities at Tata Mutual Fund, recommends:
- 40% in hybrid/multi-asset funds for stability.
- 30-40% in core diversified categories, such as large-cap or large-and-midcap funds.
- The remaining are in small-cap or sectoral funds (e.g., banking, healthcare).
Key Insights for 2025
- Diversification is Key: A mix of domestic and international funds can offer growth and stability.
- Volatility Preparedness: Use SIPs or STPs to manage market fluctuations effectively.
- Focus on Fundamentals: Avoid chasing past performance; consider current valuations and long-term potential.
- Customized Strategies: Tailor investments to your risk appetite, goals, and investment horizon.
Final Thoughts
Learn about the evolving landscape of mutual fund trends in 2025. The mutual fund landscape 2024 was marked by exceptional performances in specific categories, especially international, small-cap, and flexicap funds. As we enter 2025, investors are encouraged to adopt a balanced, long-term approach. By diversifying across asset classes and leveraging systematic investment strategies, you can navigate market volatility while optimizing returns. Always consult a financial advisor to align your investments with your goals and risk tolerance.
