Which themes/sectors have the highest AUM?

An analysis of AMFI data by Cafemutual shows that infrastructure, IT & technology and banking and financial services have the highest AUM in September 2024 across thematic/sectoral fund categories. The data includes funds which have completed at least one year as on September 2024.

Infrastructure theme tops the list of thematic/sectoral funds with the highest AUM of Rs. 50,900 crore in September 2024.

While IT & technology occupies the second spot with AUM of Rs. 39,500 crore, banking and financial services is not so far off with assets of Rs. 38,500 crore in September 2024.

Among other key themes/sectors based on AUM are opportunities and business cycle with assets of Rs. 30,300 crore and Rs. 29,300 crore, respectively.

While opportunities theme invests in companies with high growth potential, business cycle invests in companies that are expected to benefit from change in business cycle like expansion or peak.

Let us look at the table to know more.

In terms of absolute growth in the last three years, infrastructure again tops the list with an increase in AUM of Rs. 38,400 crore.

Business cycle is the second in the list with an increase of Rs. 28,700 crore in AUM while opportunities takes the third position with an increase of Rs. 25,300 crore.

IT & technology and banking and financial services complete the top 5 with an increase in AUM of Rs. 24700 crore and Rs. 22500 crore, respectively.  

In terms of growth in percentage terms, business cycle theme has seen the highest growth of 5000% in three years. Manufacturing theme comes second with an increase in AUM of 790%. PSU theme is third with about 770% growth in its AUM.

Overall, the AUM of thematic funds has increased from Rs. 1.15 lakh crore in September 2021 to Rs. 3.59 lakh crore in September 2024, a growth of over 200% in three years. (AUM taken for funds which have completed at least 1 year).

Here is the table on AUM growth in three years:

Mysore MFD VR Aiyappan of Mera Fund believes that the key reason for rising popularity of the business cycle funds is due to its flexibility to change portfolio based on the current market conditions. When it comes to the growth of manufacturing theme, he believes that the global China+1 policy has impacted the theme positively. The production-linked incentives by the government and high number of NFOs by various AMCs have also boosted the AUM of this theme/sector.

Hyderabad MFD Opinder Jain of Fin Optic Capital Services believes that infrastructure theme has been doing well due to increased government spending on it. He also attributes the growth of infrastructure to the growth of real estate. The MFD explains that as more family members have started earning, the disposable income of Indian households has increased which has led to more young people buying residential properties. He also thinks that there has been a flow of funds from equity to the real estate sector due to the good performance of the equity market in the last few years.

Mumbai MFD Satish Pandey of Imperial Value Services says that the growth of infrastructure has been due to increased focus of government. When it comes to the growth in AUM of opportunities funds, he says it is due to the growth of various promising sectors and the lure of investing in such sectors at a nascent stage.