The Indian mutual fund industry had an exceptional year in 2024, marked by strong asset growth, significant inflows, and a growing preference for Systematic Investment Plans (SIPs). With a booming market and increasing investor confidence, mutual funds remain one of the top choices for long-term wealth building.
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Here we explore the performance, trends, and expert insights shaping the future of the industry.
2024 performance: A surge in AUM
In 2024, the mutual fund industry’s assets under management (AUM) saw decent growth. By November, AUM reached ₹68.08 lakh crore, up 35.5% from ₹50.24 lakh crore in 2023.
Trivesh D, Chief Operating Officer of Tradejini, said: “Retail investors, especially those investing through SIPs, were key drivers of this growth. Positive market sentiment and strong returns boosted confidence, making mutual funds a popular choice.”
Kaustubh Belapurkar, Director-Manager Research at Morningstar Investment Pvt Ltd, added, “Mutual funds had a good 2024, with YTD returns strong across categories. However, we saw increased volatility and lower returns compared to 2023 when markets were exceptionally buoyant, especially in mid and small-cap spaces.”
Equity funds lead the charge
Equity funds, especially mid-cap, small-cap, and thematic funds, outperformed other categories in 2024.
These funds benefited from sectoral growth and retail investor enthusiasm, resulting in significant returns.
Rahul Jain, President of Nuvama Wealth, noted, “Mid- and small-cap funds saw returns of 31% and 30%, respectively. These funds thrived due to the liquidity in the market and the surge in retail investor interest.”
Kaustubh Belapurkar explained, “Mid-cap and small-cap indices had a strong year, while healthcare and technology sector funds performed exceptionally well. These sectors capitalised on the economic recovery and innovation.”
Top performing fund categories in 2024
Mid-cap and small-cap funds were the top performers, easily surpassing large-cap funds in returns. Take a look:
| Returns (%) | Alpha against N50 (%) | |||||
| Categories | 31-Dec-22 To 31-Dec-23 | YTD | 31-Dec-22 To 31-Dec-23 | YTD | ||
| Large Cap Fund | 23.93 | 16.88 | 2.63 | 5.36 | ||
| Large & Mid Cap | 29.97 | 25.64 | 8.67 | 14.12 | ||
| Flexi Cap Fund | 28.28 | 22.41 | 6.98 | 10.89 | ||
| Mid Cap Fund | 37.04 | 31.11 | 15.74 | 19.60 | ||
| Dividend Yield | 35.99 | 21.48 | 14.69 | 9.96 | ||
| Multi Cap Fund | 32.76 | 25.62 | 11.46 | 14.11 | ||
| Small cap Fund | 41.08 | 29.49 | 19.78 | 17.97 | ||
| Focused Fund | 26.12 | 21.33 | 4.82 | 9.82 | ||
| Value Fund | 34.37 | 22.40 | 13.07 | 10.88 | ||
| Contra | 34.02 | 25.78 | 12.72 | 14.26 | ||
(Source: Anand Rathi Wealth)
Feroze Azeez, Deputy CEO of Anand Rathi Wealth, added, “While mid-cap and small-cap funds delivered spectacular growth, large-cap funds provided steady and consistent returns throughout the year.”
SIPs continue to drive growth
SIPs remain the backbone of mutual fund growth. By November 2024, SIP contributions surged to ₹25,320 crore per month, up 44% from ₹17,610 crore in December 2023.
Rahul Jain commented, “SIPs have become a preferred method for retail investors. The market’s strong performance and SIP discipline are helping investors build wealth steadily over time.”
This consistent inflow of funds through SIPs has stabilised the mutual fund industry and ensured its continued growth.
| Months | SIP Inflows(In Cr) | Change (%) |
| Nov-23 | ₹ 17,073 | 0.86% |
| Dec-23 | ₹ 17,610 | 3.15% |
| Jan-24 | ₹ 18,838 | 6.97% |
| Feb-24 | ₹ 19,187 | 1.85% |
| Mar-24 | ₹ 19,271 | 0.44% |
| Apr-24 | ₹ 20,371 | 5.71% |
| May-24 | ₹ 20,904 | 2.62% |
| Jun-24 | ₹ 21,260 | 1.70% |
| Jul-24 | ₹ 23,332 | 9.75% |
| Aug-24 | ₹ 23,547 | 0.92% |
| Sep-24 | ₹ 24,509 | 4.08% |
| Oct-24 | ₹ 25,323 | 3.32% |
| Nov-24 | ₹ 25,320 | -0.01% |
(Source: Anand Rathi Wealth)
Thematic and sectoral funds gain traction
Thematic funds, such as those focused on technology, healthcare, and renewable energy, saw strong inflows.
In fact, thematic funds attracted ₹7,657 crore by November 2024, despite a slight dip from ₹12,278 crore in October.
Trivesh D noted: “Funds focusing on sectors like technology and green energy offered impressive returns. The rise of ESG investing further fueled investor interest in these funds.”
Belapurkar said, “Sectoral and thematic funds saw inflows of ₹1.4 lakh crore till November 2024, driven by 40 NFOs that raised more than ₹67,000 crore. This indicates a clear preference for thematic funds, especially in healthcare and technology.”
Sectoral fund performance
| Fund Category | YTD 2024 Returns | 2023 Returns |
| Pharma Sector Fund | 35% | 27% |
| Infrastructure Fund | 32% | 35% |
| Technology Sector Fund | 28% | 41% |
Debt funds struggle amid equity surge
While equity funds surged, debt funds saw a decline.
Debt fund inflows dropped by 92% in November 2024 compared to the previous month, with just ₹12,915 crore recorded.
Trivesh D explained: “With equities offering higher returns and inflation under control, investors are leaning towards equities rather than low-yielding debt funds. This trend will likely continue in 2025.”
Looking ahead
Looking ahead to 2025, experts predict interest in large-cap funds, as investors are expected to prioritise stability and consistent returns following strong performances from mid- and small-cap stocks.
According to Rahul Jain, large-cap funds are likely to gain favor in 2025 as investors seek safety and steady returns in a potentially volatile market.
Feroze Azeez also highlighted that flexi-cap funds, with their diversified approach, will continue to be an attractive option for those seeking a balanced investment strategy.
Retail investor engagement will remain a key driver of success, with experts noting that SIPs, equity funds, and sectoral funds will continue to play a significant role in mutual fund growth throughout 2025.