Manufacturing Mutual Funds: Know How to Make Valuable Return

Introduction

Manufacturing Mutual Funds are a type of thematic fund that focuses on investing in companies that are involved in the manufacturing sector. These funds can be an attractive option for investors looking to diversify their portfolios and potentially benefit from the growth of the manufacturing industry.

In this article, we will explore the key features and benefits of manufacturing mutual funds, as well as provide insights on how to make valuable returns from these investments.

Overview: Manufacturing Mutual Funds

Manufacturing mutual funds invest in companies that produce and manufacture goods, including automobiles, electronics, pharmaceuticals, and more. By diversifying across various sectors and companies within the manufacturing industry, these funds aim to generate long-term capital appreciation.

These funds typically focus on sectors such as:

Automobiles: Investing in companies that design, manufacture, and sell vehicles and automotive parts.

Electronics: Targeting companies involved in the production of electronic devices, components, and related technologies.

Pharmaceuticals: Investing in firms that develop and produce medications, medical devices, and healthcare products.

Consumer Goods: Focusing on companies that manufacture everyday products such as appliances, personal care items, and packaged foods.

Industrial Machinery: Investing in companies that produce equipment and machinery for industrial and commercial use.

Manufacturing mutual funds build a diversified portfolio by investing in a wide range of manufacturing companies. This diversification reduces the risk associated with investing in individual stocks while providing exposure to the growth potential of the manufacturing sector. Fund managers actively select companies based on their growth prospects, financial health, and market position, aiming to maximize returns for investors over the long term.

By investing in manufacturing mutual funds, investors can benefit from the economic development and technological advancements that drive the manufacturing sector. This approach offers a balanced strategy to achieve steady capital appreciation while mitigating risks through diversification across multiple manufacturing industries.

Investment Approach of Manufacturing Mutual Funds

The “core and satellite strategy” is a very easy way to invest money with the sole purpose of making high returns. The core is your traditional investing that includes a mix of assets that deal with general market trends giving steady and stable returns. Whereas with Satellite investments you invest in tactical bets with a focus on specific areas for example manufacturing sector to earn higher returns.

Some Key Features and Benefits of Manufacturing Mutual Funds

Here are some main advantages to look into:

Diversification: By investing in a manufacturing mutual fund, you can diversify your portfolio by gaining exposure to multiple sectors and companies within the manufacturing industry. By doing so, risk might be decreased and potential rewards raised.

Thematic Focus: Manufacturing mutual funds have a specific thematic focus. It allows them to concentrate on well-positioned companies to benefit from trends and growth in the manufacturing sector.

Professional Management: These funds are managed by experienced professionals who deeply understand the manufacturing industry and can make informed investment decisions.

Regular Updates: Manufacturing mutual funds typically update their portfolio holdings regularly. The performance, and market trends, allow investors to stay informed and make adjustments as needed.

How to Make Valuable Returns with Manufacturing Mutual Funds?

To make valuable returns from manufacturing mutual funds, it is essential to understand the key factors that influence their performance. Here are some key considerations:

Fund Performance: Look for funds with a strong track record of performance, measured by their returns over different periods. For example, the ICICI Prudential Manufacturing Fund has delivered returns of 65.05% over the past year and 26.47% over the past five years.

Fund Size: Larger funds tend to have lower expense ratios, which can help increase returns. The ICICI Prudential Manufacturing Fund has an AUM of ₹3,373.45 Crore.

Expense Ratio: Higher returns may be achieved with lower expense ratios. The cost ratio for the ICICI Prudential Manufacturing Fund is 1.89%.

Sector Allocation: Manufacturing mutual funds typically allocate their assets across various sectors within the manufacturing industry. Look for funds with a well-diversified sector allocation to minimize risk.

Company Holdings: Check the top holdings of the fund to ensure they are well-positioned to benefit from trends and growth in the manufacturing sector. For example, the ICICI Prudential Manufacturing Fund has significant holdings in companies like Larsen & Toubro and Ultratech Cement.

Top 5 Manufacturing Funds for 2024

ICICI Prudential Manufacturing Fund

The scheme aims to produce long-term capital appreciation by building a portfolio that is primarily invested in equity and equity-related securities of companies involved in manufacturing.

Investment Objective

Fund House Name: ICICI Prudential Mutual Fund

Launch Date: 07.10.18

AUM: Rs.3882.89 Crores (as of 30.04.24)

CAGR: 24.03%

Axis India Manufacturing Fund

Investment Objective

This scheme aims to deliver long-term capital appreciation by investing in equity and equity-related instruments of companies operating in the manufacturing sector.

Fund House Name: Axis Mutual Fund

Launch Date: 21.12.23

AUM: Rs.4683 Crores (as of 30.04.24)

CAGR: 31.0%

Quant Manufacturing Fund

Investment Objective

This scheme aims to produce long-term capital appreciation by investing in stock and equity-related securities of companies in the manufacturing sector.

Fund House Name: Quant Mutual Fund

Launch Date: 14.08.23

AUM: Rs.651.73 Crores (as of 30.04.24)

CAGR: 61.13%

HDFC Manufacturing Fund

Investment Objective

This fund aims to provide long-term capital appreciation by investing primarily in equity and equity-related instruments of companies involved in manufacturing.

Fund House Name: HDFC Mutual Fund

Launch Date: 15.05.24

AUM: NA

CAGR: 3.09%

Canara Robeco Manufacturing Fund

Investment Objective

This scheme aims to create long-term capital appreciation by investing primarily in equities and equity-related securities of companies operating in the Manufacturing sector.

Fund House Name: Canara Robeco Mutual Fund

Launch Date: 11.03.24

AUM: Rs.1241.89 Crores (as of 30.04.24)

CAGR: 18.46%

Conclusion

Investing in manufacturing mutual funds offers a great opportunity to diversify your portfolio and benefit from the growth of the manufacturing sector. Investors can invest via a SIP plan for added flexibility and discipline in their portfolios. These funds allow you to take advantage of professional management, a thematic focus, and diversification across various manufacturing industries, reducing the risks associated with individual stocks. By choosing funds with strong performance records, balanced sector allocations, and reasonable expense ratios, you can aim for valuable long-term returns. Whether you’re an experienced investor or new to mutual funds, understanding the key features of manufacturing mutual funds and staying informed about market trends will help you make smart investment decisions and maximize your returns.