Dhuraivel Gunasekaran

Smart Beta mutual funds are making headlines nowadays. Asset Management Companies (AMCs) are vying to introduce new funds focusing on factor-based investing.

International funds offered by domestic mutual fund companies have rewarded the Indian investors handsomely over the last few years.

To know what lies ahead for the equity markets in 2025, bl.portfolio approached experts from the asset management as well as the investment banking and broking industry for their thoughts.

Indian equity markets have been on a rollercoaster ride over the last four months. A host of factors triggered volatility and dampened investor

US equities have given better returns than Indian large-caps in recent years

Government policy initiatives, like “Make in India” and PLI schemes, have driven strong performance in manufacturing-focused equity mutual funds, with 2024 seeing returns up to 33%. While these funds focus on sectors like automobiles, capital goods, and pharmaceuticals, they can be volatile and cyclical, with past periods of underperformance. Despite short track records for many schemes, the long-term outlook remains promising, and high-risk investors may consider small allocations with a 7+ year horizon.

Total traded volume on the bourses more than doubled in 2024 due to rise in price of gold and the absence of SGBs

Mutual funds (MFs), particularly through Systematic Investment Plans (SIPs), have proven to be a powerful long-term wealth-building tool, with disciplined investors seeing significant returns over time. For instance, a Rs. 5,000 monthly SIP in top equity funds like Nippon India Growth Fund can grow to nearly Rs. 5 crore in 25 years, despite market fluctuations. Additionally, “step-up SIPs,” which increase contributions gradually, can further accelerate wealth accumulation, delivering even higher returns compared to regular SIPs.

PMS, with ₹7.5 lakh crore AUM as of November 2024, offers personalized strategies for high-income investors, requiring a ₹50 lakh minimum. It allows flexibility, including discretionary/non-discretionary options and concentrated stock exposure. While PMS delivered a strong 15.76% annualized return over a decade, outperforming benchmarks, higher costs and tax liabilities make it ideal for experienced investors seeking bespoke investment solutions.

The debt asset class is turning attractive now, with interest rates peaking and possible rate cuts. This makes it a good idea to lock in the current yields that are available on quality debt instruments.