Manufacturing Mutual Funds: Your Complete Guide to Success

Home - Finance - Manufacturing Mutual Funds: Your Complete Guide to Success
Manufacturing Mutual Funds: Your Complete Guide to Success

Table of Contents

Introduction

Manufacturing Mutual Funds focus on investing in sectors related to manufacturing, such as raw materials, intermediate goods, and finished goods. These funds capitalize on the manufacturing sector’s growth potential, driven by economic development.

In this article, we will explore the key aspects of thematic or sectoral funds, including their benefits, risks, and investment strategies.

What is Covered Under the Manufacturing Sector or Theme?

The following products are covered under this sector:

Basic Materials

  • This sector includes companies that extract and process natural resources. Such as mining companies that dig up metals, minerals, and other raw materials from the earth.
  • These companies provide the basic building blocks for many other industries, such as construction, manufacturing, and chemicals.

Capital Goods

  • This sector includes companies that produce machinery, equipment, and other capital goods.
  • These are the companies that make the tools and machines used by other businesses to produce their products or provide their services.
  • Examples include companies that make construction equipment, industrial machinery, and business tools and devices.

Healthcare

  • This sector includes companies that produce medical devices, pharmaceuticals, and other healthcare-related products.
  • These companies develop and manufacture the medicines, treatments, and tools used by healthcare providers to diagnose, treat, and care for patients.
  • Examples include drug companies, medical device manufacturers, and biotechnology firms.

Auto and Auto Components

  • This sector includes companies that produce vehicles, such as cars, trucks, and motorcycles, as well as the parts and components that go into these vehicles.
  • These companies design, manufacture, and sell the vehicles and parts that keep the transportation industry running.
  • Examples include major automakers, as well as companies that make tyres, electronics, and other vehicle components.

Consumer Goods

  • This sector includes companies that produce a wide variety of consumer products, such as electronics, appliances, clothing, and other household items.
  • These are the companies that make the products that people use in their everyday lives.  From televisions and computers to clothing and household cleaning supplies.
  • Examples include companies manufacturing smartphones, home appliances, and consumer packaged goods.

Key Benefits of Investing in Manufacturing Mutual Funds

Here are some vital points to keep in mind before investments in this category:

High Growth Potential: Economic development drives the manufacturing sector, leading to high growth potential for Manufacturing Mutual Funds.

Diversification: Manufacturing funds diversify a portfolio by investing in a mix of sectors and companies.

Long-term Focus: These funds suit long-term investors who can ride out market fluctuations and benefit from the sector’s growth potential.

List of Top 3 Manufacturing Mutual Funds

The selection of any scheme should be based on financial goals, risk capacity and investment horizon. After assessing all picks from the below-mentioned 3 best manufacturing schemes for 2024:

HDFC Manufacturing Fund

With a 3-year annualized return of 21.84%, this fund suits investors who understand macro trends and prefer selective bets for higher returns compared to other equity funds.

ICICI Prudential Manufacturing Fund

This fund delivers a 3-year annualized return of 30.90% and aims to generate long-term capital appreciation by investing predominantly in equity and equity-related securities.

SBI PSU Fund

Offering a 3-year annualized return of 41.72%, this fund is a good option for investors seeking a diversified portfolio with a focus on public sector undertakings.

How to Invest in Manufacturing Funds Online?

Follow the below-mentioned steps to invest easily through an online platform:

Create an Account: Sign up for a MySIPonline account to access a range of mutual funds.

Choose a Fund: Select the Manufacturing Mutual Funds that best suits your investment goals and risk tolerance.

Set Up an Investment mode: Start a systematic investment plan to invest a fixed amount regularly.

Monitor and Adjust: Regularly monitor your portfolio and adjust your investments as needed to achieve your financial goals.

Who Should Invest in Manufacturing Sector Mutual Funds?

Let’s check the suitability of this scheme for varied investors:

Long-term Investors

  • These are investors who are focused on the long term, rather than trying to make quick profits in the short term.
  • They are willing to hold onto their investments for many years, even if the market experiences ups and downs in the meantime.
  • They believe that over the long run, the overall market will continue to grow, so they can ride out any temporary dips or fluctuations.
  • These investors are typically less concerned with daily or monthly changes in their portfolio value and more focused on their long-term financial goals.

Risk-Takers

  • These are investors who are willing to take on higher levels of risk in their investments.
  • They may invest in riskier assets, such as speculative stocks or emerging markets, with the hope of earning higher returns.
  • They understand that with higher risk comes the potential for higher rewards, but also the possibility of greater losses.
  • These investors are comfortable with the uncertainty and volatility that can come with more aggressive investment strategies.

Diversification Seekers

  • These are investors who try to spread out their investments across different sectors, industries, and asset types.
  • They believe that diversification can help reduce the overall risk in their portfolio by ensuring that they are not overly exposed to any one particular investment.
  • For example, they may invest in a mix of stocks, bonds, real estate, and other assets to create a well-rounded, diversified portfolio.
  • This approach can help protect their investments from the ups and downs of any single market or industry.
  • Diversification seekers are often looking to balance risk and return in their investment strategy.

Risks and Considerations for Thematic Fund Investors

The following are some key considerations to look out for:

High Volatility: Manufacturing funds can be highly volatile, and investors may experience significant losses in the short term.

Sector-Specific Risks: The performance of these funds heavily depends on the manufacturing sector. It can be affected by government policies, global economic trends, and supply chain disruptions.

Valuations: The current high valuations of manufacturing stocks may lead to lower returns in the future.

Conclusion

Manufacturing Funds offer a unique opportunity for investors to participate in the manufacturing sector’s growth potential. Investors are advised to invest via SIP to reduce risk and gain more profits for their portfolios. However, investors must understand the associated risks and benefits and invest with a long-term perspective. By choosing the right fund and setting up a systematic investment plan, investors can potentially achieve their financial goals while riding out market fluctuations.

pawansharma

Ads Blocker Image Powered by Code Help Pro

Ads Blocker Detected!!!

We have detected that you are using extensions to block ads. Please support us by disabling these ads blocker.

Powered By
100% Free SEO Tools - Tool Kits PRO