10 Sectors that were Mutual Funds’ Best-Loved in 2021

The compilation is made by considering the increase in the share of overall mutual fund equity AUM in comparison to the previous year.

1. IT software

Businesses nowadays are getting increasingly digitised and are investing more in technology. A growing number of schemes added these stocks to their portfolios. The overall equity AUM for this sector changed by 1.62% over the last year.

Further, a few favourite stocks in this sector were:

• Tech Mahindra

• Persistent Systems

• Birlasoft

• HCL Technologies

• Wipro

• Infosys

• Nazara Technologies

• Coforge

Schemes like Invesco India ESG Equity, Aditya Birla SL ESG, Axis Value, IIFL Quant and HDFC Dividend Yield added exposure to the IT software sector.

2. PSU banks

The Nifty PSU banks surpassed Nifty 50 in 2021. The main reason behind this was the increased profitability of the PSU banks. As per reports, PSU banks announced high quarterly profits during the last 24 quarters. Moreover, not a single PSU bank outlined net loss in the Q2 of FY22.

A few sought-after stocks of this sectors were:

• Canara Bank

• State Bank of India

• Bank of Baroda

• Indian Bank

• Bank of India

• Punjab National bank

• Punjab and Sind Bank

• Union Bank of India

• Central Bank of India

The equity AUM change in this sector was around 0.86% during the last year. Further, schemes including ITI Value, Quant Quantamental, Aditya Birla SL Pure Value, Quant Infrastructure and Indiabulls Tax Savings amplified their holdings into this particular sector.

3. Auto ancillary

The growth prospects of auto ancillary companies have increased over this year due to the heightened acquisition of EV tech companies. The overall equity AUM for this sector witnessed a change of 0.64% during 2021.

Here are a few desired stocks of the auto ancillary sector:

• Wabco India

• Sona BLW Precision

• Sansera Engineering

• Minda Industries

• Minda Corporation

• Automotive Axles

• Jamna Auto Industries

• Bosch

• Motherson Sumi

L&T Large and Midcap, Sundaram Large and Mid Cap and SBI Large & Midcap were a few schemes that added momentum in this sector.

4. E-commerce

Over the past few years, e-commerce has been one of the fastest-growing sectors. With newer opportunities, the new-age stocks managed to steal the limelight, including:

• Zomato

• FSN E-Commerce Ventures

• One97 Communications

• PB Fintech

• Indiamart Intermesh

The change in equity AUM for this sector was 0.57% in 2021. Further, CICI Pru Retirement Fund-Pure Equity, SBI Consumption Opp, Kotak Tax Saver, Axis Special Situations and Franklin India Opportunities were the schemes that added exposure to this sector.

5. Hospital and healthcare services

The healthcare sector of India provided newer opportunities for fund managers in 2021. Stocks that were favourites include:

• Fortis Healthcare

• Max Healthcare

• Apollo Hospitals

• Vijaya Diagnostic Centre

• Krsnaa Diagnostics

• Aster DM Healthcare

This sector poised an overall equity AUM change of around 0.49%. Moreover, schemes like Motilal Oswal Large & Midcap, BOI AXA Flexi Cap Fund and HSBC Mid Cap increased their allotment in this sector.

6. Construction and engineering

The construction and engineering sector also saw a boost, with several schemes adding to the hype. These include entities like Nippon India ETF Dividend Opportunities, Aditya Birla SL Equity Savings, Motilal Oswal Dynamic and Invesco India Focused 20 Equity.

A few stocks that stole the limelight were:

• GR Infraprojects

• Larsen and Toubro

• NCC

• PNC Infratech

• KEC International

• KNR Constructions

This sector’s share in overall equity AUM change was around 0.42% over the previous year.

7. Automobiles

Various EV stocks in the commercial vehicles latitude gained exposure, including:

• Ashok Leyland

• Tata Motors

• Force Motors

• SML Isuzu

Forecasters are also rooting for a healthy demand in this sector in the upcoming years. As a result, various schemes came forward to provide momentum to this sector. These include UTI Focused Equity, UTI Transportation & Logistics, Navi Long Term Advantage and Axis Value. The sector’s contribution to overall equity AUM change for 2021 was around 0.39%.

8. Retail

The stocks in the retail sector saw increased allocation due to schemes such as Invesco India ESG Equity, IIFL Quant, Axis Special Situations Fund and Axis Long Term Equity. Some of the favourite stocks in the sector include:

• Trent

• Go Fashion

• Bata India

• V-Mart Retail

• Vaibhav Global

• Aditya Birla Fashion and Retail

Furthermore, this sector posed an overall equity AUM change of 0.35% over the last one year.

9. Finance – NBFC

The Indian finance sector’s share in overall equity AUM change for 2021 was around 0.29%. A few significant stocks in this sector were:

• Bajaj Finance

• Poonawala Fincorp

• SBI Cards & Payment

• Equitas Holdings

• L&T Finance Holdings

Certain schemes added exposure to this sector, including ITI Small Cap, Axis Value, SBI Magnum Children’s Benefit Fund-Investment, JM Core 11 and Taurus Discovery.

10. Real estate

The last entry to this list, India’s real estate sector witnessed an overall equity AUM change of around 0.24% during FY22.

Some of the favourite stocks in this sector were:

• Oberoi Realty

• Brigade Enterprises

• Prestige Estates Pro

• DLF

• The Phoenix Mills

• Indiabulls Real Estate

• Sobha

• Macrotech Developers

• Sunteck Realty

Canara Rob Infrastructure, Quant Small Cap, Tata Business Cycle, Quant Absolute Fund and Quant Active are a few schemes that boosted momentum in this sector.

Bottom Line

All the above-mentioned sectors have poised immense growth prospects and an increased share of overall MF equity AUM during 2021. This momentum will likely spread in the coming years and create new opportunities for the Indian mutual fund market.

Frequently Asked Questions

1. What is AUM?

Assets Under Management refers to the market value of the assets that a mutual fund manages at a particular time. AUM refers to the returns that a mutual fund manages to make on investments and the capital that a manager contains at disposal for newer investments.

2. How are the top favourite sectors for mutual funds classified?

These sectors are put together by ACE MF, which is a Windows based application tool for research across Indian mutual fund schemes.

3. What was the change in overall equity AUM of the IT software sector?

In 2020, the overall equity AUM in this sector was 10.61%, which increased to 12.23% in 2021.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.