New Delhi: Retail investors, specifically domestic ones, are displaying strong interest in sectoral and thematic funds, making up 42 pc of total active mutual fund flows this year. In June 2024, the trend persisted as 55 pc of the total active flows, amounting to Rs 22,350 crore, were invested in these funds, as reported by Elara Capital.
This trend is still causing significant excitement in specific areas of the market (mainly in Infrastructure, Power, Manufacturing funds). Thematic and Sectoral funds have received Rs 70,000 crore in investments so far this year. Manufacturing funds have received nearly 28 percent of these inflows, while Infrastructure funds have garnered 8 percent. Around Rs 19,500 crore have been invested in Manufacturing funds and Rs 5,900 crore in Infrastructure funds in total.
The mutual fund sector is capitalizing on the surge in manufacturing for investment, spurred by the country's evolving manufacturing sector due to the 'China+1' strategy, the Government's PLI scheme, and enhanced infrastructure, enabling a smoother transition.
At the beginning of this year, manufacturing funds had assets worth Rs 7,700 crore, which have increased to Rs 32,200 crore by June 2024. Similarly, the Assets Under Management (AUM) of Infrastructure funds were Rs 19,700 crore at the beginning of the year, but as of June 2024, it has increased to Rs 32,300 crore.
Sunil Jain of Elara Capital stated that a significant amount of money flowing in, especially in Manufacturing funds, has led to an unusual increase in demand for certain stocks, resulting in a significant price impact.
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