The mutual fund industry in India witnessed a stellar year in 2024, driven by strong economic growth, bullish equity markets, and robust inflows from retail and institutional investors. With India’s GDP growth hitting record levels and sectors like infrastructure, manufacturing, and technology seeing remarkable growth, mutual fund Mutual Fund Categories across various sectors delivered significant returns.
The rising participation of retail investors through SIPs (Systematic Investment Plans) and the increasing popularity of thematic and sectoral funds further propelled the industry’s growth.
In order to know which mutual fund categories will be the top performing categories in 2025, it is important to know how different categories performed in 2024.
Here’s a snapshot of how mutual funds performed in 2024.
How Did Mutual Fund Categories Perform in 2024?
2024 was a remarkable year for mutual fund Categories, with most equity categories delivering double-digit returns. Sectoral and thematic funds like defence, infrastructure, and technology led the charge, while diversified equity categories like mid-cap and small-cap funds continued to create wealth for investors.
Debt funds also delivered steady returns, benefiting from stable interest rates and a favorable economic environment. Hybrid funds maintained their popularity among conservative investors, offering a balanced approach to equity and debt allocation.
Performance of Each Category in 2024
Top Performing Individual Funds
| Scheme Name | 2024 YTD | 3 Years | 5 Years |
| Mirae Asset NYSE FANG+ETF FoF | 84.00% | 31.20% | – |
| Mirae Asset S&P 500 Top 50 ETF FoF | 66.70% | 22.80% | – |
| Motilal Oswal Midcap Fund | 58.00% | 35.60% | 33.90% |
| LIC MF Infra Fund | 52.40% | 33.10% | 28.80% |
| Motilal Oswal ELSS Tax Saver Fund | 50.00% | 27.70% | 25.20% |
| Bandhan Small Cap Fund | 48.90% | 29.80% | – |
| Motilal Oswal Small Cap Fund | 48.30% | – | – |
| HDFC Defence Fund | 47.70% | – | – |
Top Performing Diversified Equity Funds
| Fund Category | 2024 YTD | 3 Years | 5 Years |
| Mid Cap | 32.60% | 27.90% | 48.00% |
| Small Cap | 31.50% | 29.50% | 63.90% |
| Contra | 28.30% | 28.10% | 43.60% |
| Large & Mid Cap | 27.90% | 22.70% | 35.20% |
| Multi Cap | 27.80% | 25.20% | 39.10% |
Top Performing Sectoral/Thematic Funds
| Fund Category | 2024 YTD | 3 Years | 5 Years |
| Defence | 47.70% | – | – |
| Pharma & Health Care | 37.80% | 20.90% | 28.10% |
| Infrastructure | 34.00% | 28.00% | 29.10% |
| PSU Equity | 31.70% | 35.50% | 28.10% |
| Technology | 31.10% | 13.20% | 29.90% |
Top Performing Debt Funds
| Fund Category | 2024 YTD | 3 Years | 5 Years |
| Long Duration | 11.60% | 6.20% | 6.70% |
| Gilt Fund with 10-Year Constant Dur. | 9.90% | 5.70% | 6.70% |
| Dynamic Bond | 9.10% | 6.00% | 6.40% |
| Short & Mid Term | 8.80% | 5.90% | 6.50% |
| Medium to Long Duration | 8.70% | 5.60% | 6.10% |
Top Performing Hybrid Funds
| Fund Category | 2024 YTD | 3 Years | 5 Years |
| Multi Asset Allocation | 18.60% | 12.90% | 14.20% |
| Aggressive Allocation | 16.50% | 11.70% | 13.80% |
| Arbitrage | 14.10% | 8.30% | 9.40% |
Which Mutual Fund Categories Can Be the Top Performing Categories in 2025?
Based on the performance trends of 2024, we can draw some inferences about potential top-performing mutual fund categories in 2025:
- Equity Funds: Categories like mid-cap and small-cap funds have shown resilience and high returns in 2024. With India’s economic growth projections and increasing retail participation, these categories could continue to deliver strong results, though they may be subject to market volatility.
- Sectoral/Thematic Funds: Funds focused on technology, healthcare, and infrastructure might gain momentum if sectoral tailwinds align with global and domestic economic trends.
- Hybrid Funds: With markets expected to remain volatile, hybrid funds (such as balanced advantage funds) may attract investors seeking stability with moderate equity exposure.
- Debt Funds: In a rising interest rate scenario, short-duration and liquid funds could be safer options, though long-duration funds might gain if rates stabilize or decline.
However, it is crucial to note that past performance is not indicative of future returns. Mutual fund categories performance depends on various factors, including market conditions, government policies, and global economic trends.
Disclaimer: The above observations are general inferences based on historical data and trends. They are not investment advice. Please consult with a financial advisor before making any investment decisions.
Which Fund Suits Whom?
- Equity Funds: Best suited for long-term investors with a high-risk appetite. Mid-cap and small-cap funds are ideal for those seeking aggressive growth, while large-cap funds offer stability.
- Sectoral and Thematic Funds: Suitable for seasoned investors looking to capitalize on specific high-growth sectors. These funds require active monitoring.
- Debt Funds: A great choice for conservative investors looking for stable returns and lower risk. Long-duration funds work well in a stable interest rate environment.
- Hybrid Funds: Ideal for first-time investors or those seeking a balance between equity and debt exposure. These funds offer lower risk with moderate returns.
Conclusion
2024 has been an exceptional year for mutual fund categories, with equity and sectoral funds taking center stage. The strong economic backdrop and market-friendly policies have created a conducive environment for mutual fund investments. As always, investors must align their fund selection with their financial goals, risk tolerance, and investment horizon. Whether you’re a seasoned investor or a beginner, 2024 has shown that mutual funds continue to be a reliable avenue for wealth creation.
Suggested Read – How SIPs Can Transform Your Wealth in 2025: Top Tips & Strategies
