Thematic mutual funds receives the highest inflows of Rs 46,000 crore in FY24.

The most popular theme that has caught the attention of fund managers and retail investors is  Manufacturing funds. Manufacturing in India has been a major focus for this governement. Now that the election results are out, we can expect stable policies to be implemented to further the goal of making India a manufacturing hub.

With the government’s vision for India to become a $5 trillion economy, manufacturing sector will play a crucial role. Let’s consider an interesting fact.

Country High growth phase Average Real GDP growth in high growth phase Manufacturing share at start of high-growth phase Manufacturing share at the end of high-growth phase
Thailand 1985-1991 9.30% 21.90% 28.20%
China 1990-2005 9.80% 9.10% 32%
Indonesia 1983-1996 6.30% 13.40% 24.1
Vietnam 2010-2022 6.10% 19.20% 25.80%
India 2023-2030 15%

Most Asian countries have a higher share of manufacturing in their GDP. China’s manufacturing share has risen to 32% from 9.10%, and similarly for other countries. This trend underscores the critical importance of manufacturing theme for India in its pursuit to become a $5 trillion economy.

What does Aatmanirbhar Bharat, Make in India, PLI schemes, PM Gatishakti, and several other schemes have in common? They all aim to boost the manufacturing sector in India.

As a result, Manufacturing GVA is expected to grow 2.8x to drive the overall economic growth by 2030.

FY23 FY30E
Nominal GDP 3,353 7,000 2X
Manufacturing GVA 453 1,281 2.8X
Overall exports 778 1,552 2X
Merchandise exports 453 1,198 2.6X
Overall capex, GCF 1,080 2,112 2X

Factors that will provide a significant boost to the manufacturing sector.

  1. The HSBC India manufacturing PMI index soared to the highest level in 16 years (59.1) in March, 2024-  A reading above 50 suggests expansion.
  2. India is the fastest-growing consumer Market providing sufficient scale to support local manufacturing
  3. India to become the largest pool of Labor supply with lowest labour cost globally
  4. Per Capita Income at an Inflection Point- India Per Capita Expected To Double At A Faster Pace
  5. Deleveraged Corporate Sector- This means the corporates have the capability to take more leverage which will result in higher CAPEX and higher growth
  6. Globally Competitive Corporate Tax Structure- India Amongst Lower Corporate Tax Rates Within Major Asian Economies
  7. China-Plus-One model gaining traction, and many multinational companies now regard India as one of the go-to destinations. A considerable amount of investment is expected to flow into manufacturing owing to these initiatives.

To capitalize on the trend, several fund houses have launched THEMATIC MANUFACTURING FUNDS

What is a Manufacturing Mutual Fund?

Thematic Manufacturing Funds are equity mutual funds that invest in sectors tied to manufacturing themes. They focus on industries involved in basic materials, raw material manufacturing, and finished goods production. These funds aim to capitalize on the growth in the manufacturing sector driven by economic development. While they can generate high returns when the theme performs well, they also come with high volatility and the risk of short-term underperformance.

They are benchmarked to Nifty India Manufacturing Index

Period CAGR returns
NIFTY India Manufacturing NIFTY 500 NIFTY 50
Since Inception 15.60% 14.90% 14.70%
15 years 18.40% 16.90% 15.60%
10 years 16.20% 15.80% 14.20%
5 years 21.20% 17.20% 15.30%
3 years 25.40% 19.30% 16.30%
1 year 55.00% 40.50% 30.10%

NIFTY India Manufacturing Index has outperformed broader Indian Equity Markets in the long term

The manufacturing theme encompasses a broad range of sectors, some of which are domestic consumption-oriented while others cater to the export market. It includes both old-economy and high-tech businesses.
Manufacturing-focused funds do not invest in financial services stocks and can hence become an effective tool for diversification in portfolios skewed towards financial services.

Here’s a list of the Mutual Funds which are betting on the manufacturing boom:

Only 7 funds are available in the manufacturing investment theme.

Portfolio Allocation: Minimum 80% into Manufacturing & Allied Stocks

Based on our analysis here is our ranking of Manufacturing funds which we feel will outperform

  1. Quant Manufacturing Fund- Highest return and Sharpe ratio with better allocation of funds to rising sector although Expense Ratio is on the higher side.
  2.  ICICI Prudential Manufacturing Fund- It has consistently performed well with better fund allocation and a Sharpe ratio of 1.65, although the expense ratio is relatively high. Based on the return it has generated, we feel it is justified.
  3. Axis India Manufacturing Fund A recently launched fund, despite its limited historical performance data, can still be evaluated based on portfolio allocation and expense ratio – Axis has one of the lowest of 0.38%.
  4. BANK OF INDIA MANUFACTURING & INFRASTRUCTURE FUND – BOI has consistently performed well due to its better fund allocation and has the second-best Sharpe ratio among its peers. However, a higher Expense ratio places BoI at 4th position.
  5. ABSL Manufacturing Equity Fund- Although the Fund has provided a fairly good return, it also has the highest expense ratio and a lower Sharpe ratio.
  6. Canara Robeco Manufacturing Fund- Although the fund has one of the lowest expense ratios, we believe that it should be ranked 6th based on portfolio allocation.
  7. HDFC Manufacturing Fund
  8. Kotak Manufacture in India Fund

ICICI Prudential Manufacturing Fund-  

The fund, launched on October 11, 2018, is the oldest and most successful fund in the manufacturing theme, which invests in equity and equity-related securities of companies engaged in manufacturing.

  • AUM as on 30-Apr-24 : Rs. 3,882.89 crores
  • Typical Investment Horizon: 5+ year
  • Total Expense Ratio- 0.69% 

Investment approach- 
  • Bottom-up with Active sectoral and Multicap stock selection
  • Buy Quality Companies at Low Valuations
  • Strong Analysis Process
  • Diversified Portfolio for Long Term
RETURNS (NAV as on 07th June, 2024)
Period Invested for ₹10000 Invested on Latest Value Absolute Returns
1 Week 31-May-24 10229 2.29%
1 Month 07-May-24 10867.5 8.67%
3 Month 07-Mar-24 11267.8 12.68%
6 Month 07-Dec-23 13189.6 31.90%
YTD 01-Jan-24 12495.4 24.95%
1 Year 07-Jun-23 16504.6 65.05%
2 Year 07-Jun-22 20645.6 106.46%
3 Year 07-Jun-21 21913.4 119.13%
5 Year 07-Jun-19 32347.3 223.47%
Since Inception 11-Oct-18 33900 239.00%

Axis India Manufacturing Fund

Launched on December 21, 2023, the Axis India Manufacturing Fund is a thematic scheme that invests in equity and equity-related securities of companies engaged in the manufacturing theme.

  • AUM (As of 30 April 2024)- 4683.25 Cr
  • Typical Investment Horizon: 5+ years
  • Total Expense Ratio- 0.38%

manufacturing funds - allocation

Investment approach- 
  • Bottom-up with Active sectoral and Multicap stock selection
  • Aim to identify potential winners in the manufacturing theme
  • The fund will aim to identify companies across 3 segments of the Indian economy
    • Investments- Manufacturers investing in factory equipment and R&D to build production capacity
    • Consumption- Industries with rising demand trajectory due to domestic consumption and premiumization narrative
    • Net Exports- Focus on companies benefiting from India’s integration into the global supply chain
RETURNS (NAV as on 07th June, 2024)
Period Invested for ₹10000 Invested on Latest Value Absolute Returns
1 Week 31-May-24 10231.3 2.31%
1 Month 07-May-24 11067.6 10.68%
3 Month 07-Mar-24 11650.6 16.51%
YTD 01-Jan-24 12997.1 29.97%
Since Inception 21-Dec-23 13270 32.70%

Canara Robeco Manufacturing Fund

Launched on 11 March 2024, The Fund aims to invest in companies that are beneficiaries of Thriving Domestic Demand, Favourable Policy Reforms, Robust Private Sector, and Alternative Supply Chain. The Fund aims to capitalize on manufacturing trends and opportunities investing across relevant sectors representing the Manufacturing theme.

  • AUM (As of 30 April 2024)- 1241 Cr
  • Typical Investment Horizon: 5+ years
  • Total Expense Ratio- 0.40%

manufacturing funds- canara Robeco allocation

Name Industry Classification % of Net Assets
Maruti Suzuki India Ltd Automobiles 4.80%
Bajaj Auto Ltd Automobiles 3.67%
Reliance Industries Ltd Petroleum Products 3.50%
Hindustan Aeronautics Ltd Aerospace & Defense 3.24%
Mahindra & Mahindra Ltd Automobiles 3.03%
Bharat Electronics Ltd Aerospace & Defense 3.01%
Larsen & Toubro Ltd Construction 2.67%
NTPC Ltd Power 2.44%
Solar Industries India Ltd Chemicals & Petrochemicals 2.30%
Voltas Ltd Consumer Durables 2.18%
Investment approach- 
  • Fund Universe (Manufacturing & Allied Stocks): 227 stocks
  • Portfolio Concentration: Diversified Portfolio
  • Market Capitalization Bias: Flexible across Market capitalization
  • Investment Style: Growth biased
  • Stock Selection: Top-Down Overlay + Bottom-up

RETURNS (NAV as on 07th June, 2024)

Period Invested for ₹10000 Invested on Latest Value Absolute Returns
1 Week 31-May-24 10218.7 2.19%
1 Month 07-May-24 11060.6 10.61%
Since Inception 11-Mar-24 11680 16.80%

Quant Manufacture Fund

The scheme will invest at least 80% in manufacturing industries. The scheme will invest in companies with strong profit potential from production & exports, on the back of technology & automation, including those benefiting from the government’s ‘Make in India,’ PLI, and export incentives

  • AUM (As of 30 April 2024)- 787 Cr
  • Typical Investment Horizon: 5+ years
  • Total Expense Ratio- 0.75%
quant manufacturing funds
Investment approach- 
  • Uses Predictive Analysis
  • Fundamentally Good Companies
  • Top Down + Bottom Up
Period Scheme Return(%) Benchmark Return (%)
6 month return 35.43% 32.98%
YTD return 24.20% 24.20%
1 year return N.A. N.A.
3 year return N.A. N.A.
5 year return N.A. N.A.
Since Inception* 73.69% 56.87%

HDFC Manufacturing Fund

The HDFC Manufacturing Fund is a thematic fund that primarily invests in companies engaged in manufacturing activities. Launched on 16 May 2024 the fund is fairly new to compare across its peers.

  • AUM (As of 30 April 2024)- 10345 Cr Fairly Highest amongst its peers
  • Typical Investment Horizon: 3+ years
  • Total Expense Ratio- 0.36%
Investment approach- 
  • Stock selection will be based on bottom-up research ideas which are expected to have long runway for growth
  • Reasonably well-diversified portfolio
  • Flexible across market capitalization

ABSL Manufacturing Equity Fund

The scheme applies fund manager expertise to build a select portfolio of manufacturing stocks that have the potential for considerable long-term growth.

  • AUM (As of 30 April 2024)- 1005.60 Cr
  • Inception Date: 31 Jan 2015
  • Total Expense Ratio- 1.42%
Portfolio & Sector Holdings % of Net Assets
Larsen & Toubro Ltd. 6.93%
Bharat Electronics Ltd. 6.33%
Reliance Industries Ltd. 5.22%
Cummins India Ltd. 4.00%
Maruti Suzuki India Ltd. 3.88%
Mahindra & Mahindra Ltd. 3.74%
Century Textiles & Industries Ltd. 3.61%
Tata Steel Ltd. 3.42%
Dr. Reddy’s Laboratories Ltd. 3.29%
Voltas Ltd. 3.25%


Investment Performance

Inception – January 31, 2015 Since Inception 5 Years 3 Years 1 Years
Aditya Birla Sun Life Manufacturing Equity Fund 12.23% 17.73% 18.58% 50.76%
Benchmark – S&P BSE India Manufacturing 13.46% 20.22% 25.22% 43.85%
Additional Benchmark – Nifty 50 TRI 12.07% 15.30% 16.92% 26.27%


The Scheme seeks to generate long-term capital appreciation through a portfolio of predominantly equity and equity related securities of companies engaged in manufacturing and infrastructure-related sectors.

  • AUM (As of 30 April 2024)- 293.80 Cr
  • Inception Date: 05 March 2010
  • Total Expense Ratio- 0.94%

Equity industry allocation - manufacturing funds



Period Scheme Benchmark
1 yr 62.80% 73.00%
3 yrs 31.50% 34.60%
5 yrs 27.30% 24.70%
Risks (Very Risky)
Like all thematic offerings, these funds carry concentration risk. “Investors could be exposed to volatility associated with the sectors the fund has invested in.
Who should invest?
A seasoned investor with a high-risk appetite can consider these funds from a long-term perspective.
Investors who have sufficient knowledge of specific sectors and can accommodate certain aggressiveness in their portfolio can invest in these funds. It is suitable if the investor has the expertise to exit the portfolio when it reaches a saturation level,

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