The year 2024 witnessed sharp market movements influenced by both domestic and global factors. While some investment themes thrived and attracted inflows, others lagged. The Mirae Asset Capital Market Analyst report highlights the trends that are likely to be investors’ pick of choice in the coming year
Recent data from the Association of Mutual Funds in India (AMFI) for November 2024 reveals a month-over-month decline in total fund inflows, standing at Rs 603 billion (Rs 60,295.30 crore) compared to Rs 2,398 billion (Rs 2,39,828.69 crore) in October 2024.
However, the year-on-year (y-o-y) trend remains robust, showing approximately 135 per cent growth from Rs 256 billion (Rs 25,615.65 crore) in November 2023.
Systematic investment plans (SIPs) continued to see consistent inflows over the past several months.
Now, as we approach 2025, new trends are expected to emerge. According to a Mirae Asset Capital Market Analyst report, these are the investment themes likely to dominate in 2025.
Index Funds: The report highlights the growing popularity of index funds, with the launch of 10 new schemes in November 2024, bringing the total number of index funds to 270. Index funds are typically categorised into three baskets: market cap-based index funds, factor-based smart beta funds, and sector-based thematic funds. These low-cost alternatives to actively managed funds attracted Rs 43 billion in November 2024 and are poised to remain a significant trend in the coming year.
Hybrid Funds: Hybrid funds saw an inflow of Rs 41 billion (Rs 4,123 crore) in November 2024. This category primarily includes multi-asset allocation funds, dynamic asset allocation and/or balanced advantage funds, and balanced and/or aggressive hybrid funds. These funds’ ability to dynamically allocate assets based on market conditions, combined with the diversification offered by blending equity and debt, is expected to keep them in demand in 2025, according to the report.
Gold Exchange-Traded Funds (ETFs): In November 2024, gold ETFs witnessed an inflow of Rs 13 billion, marking a 64 per cent y-o-y increase in assets under management (AUM) to Rs 442 billion.
Amid geopolitical tensions, global uncertainties, and inflationary pressures, gold remains a primary hedging tool. A standard 5-10 per cent portfolio allocation to gold is likely to continue as a strategy for mitigating market volatility and earning returns in 2025, according to the report.
Systematic Investment Plans (SIPs): Retail investors’ growing interest in SIPs is expected to persist in 2025. A 48 per cent y-o-y growth highlights its popularity.
SIPs have emerged as a reliable way for investors to balance market volatility, manage income uncertainties, and tap into high-growth themes, such as green energy, technology, etc. This trend is likely to remain strong among retail investors.
Debt-Oriented Schemes: Debt funds are expected to remain a key investment theme in 2025, providing stability and consistent income amid market uncertainty. Despite a decline in inflows to Rs 129 billion in November 2024 compared to Rs 1,574 billion in October 2024, the trend is positive y-o-y. In November 2023, debt schemes saw an outflow of Rs 47 billion (Rs 4,706.75 crore). This reversal indicates their growing relevance as a stable investment option.