Early investment in transformative trends often yields the highest returns, as seen with the rise of the Internet, the smartphone revolution, and the advent of e-commerce. Now, India's energy landscape is undergoing a profound transformation, offering another compelling opportunity for astute investors. With a flourishing economy, a growing population, and a steadfast commitment to sustainable development, India's energy sector is ripe for investment. Here’s how you can capitalise on this dynamic and rapidly evolving market. <h2>Oil and Gas</h2>The oil and gas sector forms the backbone of India's energy mix and offers multiple investment avenues. Some companies find it, others move it, and some sell it. This sector can be divided into three main categories: <ol><li>Upstream companies: These are involved in exploration and production. They are capitalising on the government's favourable policies, which include remunerative prices for domestic oil and gas, and the linking of gas rates to crude oil. </li><li>Midstream companies: These focus on processing, transporting and storing crude oil and natural gas. Long-term investments in gas transmission lines, LNG terminals, and city gas distribution networks are driving their growth. </li><li>Downstream companies: Involved in refining, marketing, and distribution, these companies are set to benefit as India's demand for petroleum products takes off.</li></ol> <h2>Power</h2> The power sector, once fraught with challenges, now presents significant potential. <ol><li>Power generation companies: Whether they utilise thermal, gas, hydro, nuclear, or <keyword id="34553" type="General" weightage="20" keywordseo="renewable-energy" source="Orion">renewable energy</keyword>, these companies are crucial for meeting India's growing electricity demand.</li><li>Transmission and distribution (T&amp;D) companies: Similar to the thread holding together a pearl necklace, these companies ensure the efficient delivery of electricity to consumers. </li></ol> The government's focus on modernising the power sector is expected to improve efficiency and attract further investments. <h2>Renewables</h2>Possibly, the most-watched space today is renewable energy. And for a good reason. <ol><li>Solar and wind companies: These are growing exponentially, driven by government incentives, falling technology costs, and increasing clean energy awareness. The government's ambitious targets for renewables capacity and the introduction of production-linked incentives (PLIs) further boost this sector's prospects. </li></ol><h2>Energy ancillaries</h2> Often overlooked, the energy ancillary sector could prove to be a hidden gem for investors. <ol><li>EPC Services: Companies providing Engineering, procurement and construction (EPC) services are essential enablers of India's energy infrastructure expansion. </li><li>Power T&amp;D equipment: Demand for transmission and distribution equipment is set to soar as the country invests in upgrading and expanding its energy grid.</li><li>Heavy electrical equipment and energy storage solutions: These are crucial for supporting the growing renewable energy sector and improving overall energy efficiency.</li></ol><h2>Investment Playbook</h2>Investors seeking to capitalise on India's energy transformation should adopt a long-term perspective. Note the energy sector's growth trajectory is not a sprint, but a marathon. While short-term fluctuations are inevitable, the long-term potential of the energy sector is undeniable. Key strategies include: <ul><li>Riding the growth wave: Focus on companies with strong financial performance, growth prospects, environmental impact, and management quality. This approach positions investors to reap the rewards of this exciting growth story.</li></ul><ul><li>Diversification: Lower risk by <keyword id="35175" type="General" weightage="20" keywordseo="investing" source="Orion">investing</keyword> in an intelligent blend of companies across different energy sources and segments. This strategy can cushion the impact of volatility in any single area.</li></ul><ul><li>Investment routes: Investors can choose between <keyword id="22374491" type="General" weightage="20" keywordseo="direct-stock-investing" source="Orion">direct stock investing</keyword> and <keyword id="22374492" type="General" weightage="20" keywordseo="energy-focussed-thematic-mutual-funds" source="Orion">energy-focussed thematic mutual funds</keyword>. Both routes offer opportunities to achieve financial goals. </li></ul>India’s energy sector offers a wealth of opportunities for smart investors. By adopting a strategic, diversified approach and focusing on long-term growth, investors can not only achieve their objectives but also play a part in shaping a sustainable energy future for the country. Disclaimer: The article is authored by Sajal Roy, Anjali Investments. The opinions expressed are those of the author and do not necessarily reflect the views of Business Insider India. Do your own research (DYOR) before deciding to invest in any financial asset class. This article is published by the Insider Studios team. You can get in touch with them on <a href="mailto:insiderstudios@businessinsider.in">insiderstudios@businessinsider.in</a>.

Capitalising on India's energy revolution: A guide for smart investors

<ul><li>AMFI data indicates a heightened investor preference for sectoral/thematic funds </li><li>During market upswings, it's typical for investors to lean towards thematic investing, aiming to outperform the market. </li><li>Banking, capital goods and infrastructure funds should continue to do well in 2024. </li></ul>Between October 2022 and October 2023, the assets under management (AUM) of sectoral/thematic funds surged by 30% to reach ₹2.18 lakh crore. The allure of attractive returns stands out as just one of the contributing factors driving the increased interest in sectoral/thematic funds. AMFI data indicates a heightened investor preference for sectoral/thematic funds targeting specific sectors, like <keyword id="44530" type="General" weightage="20" keywordseo="psu" source="Orion">PSU</keyword> companies, over diversified funds encompassing various sectors. During market upswings, it's typical for investors to lean towards thematic investing, aiming to outperform the market by focusing on specific themes or sectors. “Sectoral or <keyword id="917586" type="General" weightage="20" keywordseo="thematic-funds" source="Orion">thematic funds</keyword> come into focus when the markets are doing well. Now that we have had three years of really good performance by the markets, people want to go down the risk curve,” says Mihir Vora, CFO, Trust <keyword id="6357979" type="General" weightage="20" keywordseo="mutual-funds" source="Orion">Mutual Funds</keyword>. In 2023, under thematic funds, the PSU sector has done well giving returns of almost 54%. Under <keyword id="6022989" type="General" weightage="20" keywordseo="sectoral" source="Orion">sectoral</keyword> funds, infrastructure funds have done well. Giving returns of about 40%. Technology funds have done well, giving returns of over 27%. However, the banking sector has underperformed, it has given returns of around 18% but lower than that of PSU or infrastructure funds. Consumption funds have given returns of around 24%. “Markets go through periods of rotation where different sectors and themes come to the fore from time to time. For instance in 2023, PSU, manufacturing and infrastructure were some of the better performing themes, while consumption, FMCG and financials relatively lagged,” says Kaustubh Belapurkar, director, manager research, Morningstar Investment Research India (formerly known as Morningstar Investment Adviser India). What can we expect in 2024 Indian thematic funds enjoyed a stellar 2023, fueled by government tailwinds propelling infrastructure and PSU sector and themes. However, as we step into 2024, things might not be the same. Global economic headwinds may cast a shadow over international themes, demanding cautious navigation. Nonetheless, selective investors, particularly those focused on government-backed initiatives and long-term growth trends, could still unearth alpha-generating opportunities. “Banking is expected to do well. Capital goods and infrastructure should continue to do well. Plus growth as a style is likely to outperform value unlike this year,” says Vora. What investors should keep in mind “Investors are best served by investing in diversified equity funds, where managers will take graded overweight or underweight exposures in sectors depending on their outlook,” says Belapurkar. Thematic funds are focussed on a few themes or sectors or style. “So it is a little more risky than diversified funds. Basically it should be used by investors who are themselves taking the call of sectors of themes. It is an active call that the investor has to make himself. The investor needs to decide which sector he is bullish on and take a call,” says Vora. He adds that investors should realise that when the markets have already done well for a long period of time they need to be very conscious that when they are adding thematic funds to their portfolio, they are adding risks at a higher level. So one needs to be very choosy of what one is getting into and really understand the risks.

Explained: Will thematic funds continue to be attractive in 2024?

<ul><li>The core of the fund’s portfolio, (at least 80%), will be allocated to stocks that fall under the non-cyclical consumer theme within the basic industries. </li><li>The fund will track the Nifty India Consumption Index (TRI). </li><li>Thematic funds are considered risky due to their concentrated focus which limits diversification. </li></ul><keyword id="6431261" type="General" weightage="20" keywordseo="hdfc-mutual-fund" source="Orion">HDFC Mutual Fund</keyword> has launched the HDFC Non-Cyclical Consumer Fund, an open ended equity scheme. The new fund offer for the scheme will open for subscription on June 23, 2023, and close on July 7, 2023. The investment objective of the fund is to generate long-term capital appreciation by investing predominantly in equity, and equity related securities of companies with a focus on a non-cyclical consumer theme. The fund will track the Nifty India Consumption Index (TRI). It is a benchmark index that measures the performance of the Indian consumption sector, including companies engaged in consumer goods, consumer services, and related industries, providing a comprehensive view of the overall performance of the consumption theme in the Indian stock market. The core of the portfolio, (at least 80%), will be allocated to stocks that fall under the non-cyclical consumer theme within the basic industries. These industries include consumer goods, consumer services, telecom, healthcare, media, entertainment, and publication. The scheme would invest across segments, and market capitalisation. HDFC MF says that the investment strategy involves targeting companies that are either market leaders, or experiencing growth in market share due to factors such as superior execution, scalability, and effective adoption of technology. The fund will be equally focussed on companies that are likely to witness steady and secular growth, and also companies that have a possibility of a turnaround. The companies the fund will invest in will be from the consumer discretionary, fast moving consumer goods (FMCG), telecom, and healthcare industries. <cmsannotation type="cmsannotation" annotationid="subhead" text="What is the purpose of such a fund?">What is the purpose of such a fund?</cmsannotation> Thematic mutual funds focus on a particular investment theme, such as technology, healthcare, renewable energy, or any other sector or trend that is expected to experience significant growth, or market potential. These funds aim to capitalize on the potential growth opportunities within the chosen theme by investing in companies that are directly related to or benefit from that theme. Says Direndra Kumar, CEO, ValueResearch, “All mutual fund companies keep launching funds and keep doing activity. There is nothing in this fund which cannot be done in another fund. The agents get a new excuse to talk to the investors, and also when it is a new fund, they do not need to justify why they have not performed well. Mutual funds are a consumer product and a new fund gives you an opportunity to tell a new story.” There are already about seven funds in this space which are over 10 years old. However, this is the first such fund from HDFC Mutual Fund. <cmsannotation type="cmsannotation" annotationid="subhead" text="Historical performance of thematic consumption funds">Historical performance of thematic consumption funds</cmsannotation> <table style="border-width: initial; border-style: none;"><colgroup></colgroup><col /><col /><col /><tbody><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;background-color:#ffffff;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Funds </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;background-color:#ffffff;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">3 year return (%) </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;background-color:#ffffff;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5 year return (%) </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Aditya Birla Sun Life India GenNext Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">27.33 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15.34 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Canara Robeco Consumer Trends Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">29.26 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16.71 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Mirae Asset Great Consumer Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30.52 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">16.24 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nippon India Consumption Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">31.28 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">18.01 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Nippon India ETF Nifty India Consumption </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">22.06 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10.97 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">SBI Consumption Opportunities Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">36.25 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">15.08 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Sundaram Consumption Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">23.79 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10.34 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tata India Consumer Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">26.36 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">12.54 </td></tr><tr><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">UTI India Consumer Fund - Direct Plan </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20.76 </td><td style="border-left:solid #000000 0.9999974999999999pt;border-right:solid #000000 0.9999974999999999pt;border-bottom:solid #000000 0.9999974999999999pt;border-top:solid #000000 0.9999974999999999pt;vertical-align:bottom;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">10.07 </td></tr></tbody></table> Source: Value Research <cmsannotation type="cmsannotation" annotationid="subhead" text="Should you invest?">Should you invest?</cmsannotation> Thematic funds are considered to be among the riskier categories of mutual funds. This is primarily because these funds construct portfolios based on specific themes, which can limit the range of investment opportunities available. Thematic funds typically focus on investing in stocks that are directly related to the chosen theme, which may result in a semi-diversified portfolio. “My advice to any investor is to never invest in a new fund. When it comes to mutual funds, all you have is some track record - where it has invested, how it has performed. Here I do not know anything. My other advice is that never invest in a sectoral, or a thematic fund. My primary goal of investing in a mutual fund is that I should diversify. The very basic thing is not being achieved in case of a thematic fund,” says Kumar. In other words, in the case of thematic funds, because the concentration is on a specific theme or a sector, the fund's performance is more susceptible to the fluctuations. Therefore, investors should be aware of the potential risks and carefully consider their investment objectives and risk tolerance before investing.

HDFC Mutual Fund launches its first non-cyclical consumer fund – Should you invest?

<ul><li>If you are looking at equity funds that deliver superior returns, look no further. Here are the top 20 equity funds collated by Value Research.</li><li><keyword id="5647500" type="General" weightage="20" keywordseo="BHARAT-22-ETF" source="Orion">BHARAT 22 ETF</keyword> and ICICI Prudential BHARAT 22 FOF were on the top of the list as they delivered 28% returns in the last one year.</li><li>Another analysis of the report shows that most funds in the top performing list were from the mid cap category.</li></ul>Mutual funds have been witnessing record inflows by investors every month, thanks to the systematic investment trend that is now a savings pattern of retail investors. This is applaudable because it is happening at a time when foreign institutional investors are selling Indian stocks aggressively, which fortunately did not impact domestic investors. Inflows into <keyword id="15961802" type="General" weightage="20" keywordseo="equity-oriented-mutual-funds" source="Orion">equity oriented mutual funds</keyword> hit a nine-month high in February with an infusion to the tune of ₹15,686 crore. The inflows stood at ₹12,546 crore in January, as per Association of <keyword id="864677" type="General" weightage="20" keywordseo="Mutual-Funds-in-India" source="Orion">Mutual Funds in India</keyword> (AMFI) data. High inflows were seen in thematic and <keyword id="497338" type="General" weightage="20" keywordseo="small-cap-funds" source="Orion">small cap funds</keyword> at ₹3,856 crore and ₹2,246 crore respectively. Mutual funds’ <a href="https://www.businessinsider.in/stock-market/news/mutual-funds-raise-bets-on-mid-small-cap-stocks-amid-volatile-markets/articleshow/98516460.cms">interest in mid and small caps has been growing </a>in the last three quarters. In fact, mutual fund categories that have performed relatively better include small, mid and thematic funds. Here are the top 20 equity funds collated by Value Research report on ‘Best Funds for wealth, income, short term goals and tax saving 2023’ as per their performance in the last one year. BHARAT 22 ETF and ICICI Prudential BHARAT 22 FOF were on the top of the list as both delivered 28% returns each to investors in the last one year. ICICI Prudential BHARAT 22 FOF is a fund-of-funds scheme that tracks BHARAT 22 ETF. Bharat 22 ETF was introduced by the government in the Union Budget 2017 as a vehicle to achieve its divestment target. The index is collectively comprised of 22 stocks of central public sector enterprises (CPSE), public sector banks and private companies which are strategic holding of specified undertakings of unit trust of India (SUUTI). Another analysis of the report shows most funds in the list were from the mid cap category that have higher returns. Note that interest in <a href="https://www.businessinsider.in/stock-market/news/mutual-funds-raise-bets-on-mid-small-cap-stocks-amid-volatile-markets/articleshow/98516460.cms">mid caps has been growing </a>in the last three quarters as it saw inflows of ₹14,632 crore at a time when large-cap funds witnessed inflows worth less than half of it at ₹6,392 crore in the last three quarters. <div type="image" title="Top 20 equity funds (1)" msid="99388894" hostid="261"></div>Source: Value Research Meanwhile, the bottom 20 funds that have delivered poor returns in the last one year included most of the small and flexi cap stocks. This comes at a time when markets have been extremely volatile in the last one year due to high inflation and macroeconomic challenges. This led to heavy outflows in stocks that couldn't stand through the testing times. Nifty Smallcap 100 index has lost 15% in the last one year while Nifty Midcap 100 lost 2.38%. <div type="image" title="Bottom 20 equity funds" msid="99388896" hostid="261"></div>Source: Value Research SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/finance/news/india-to-double-its-economy-to-7-trillion-by-2030/articleshow/99381185.cms">India set to be a $7 trillion economy by 2030, powered by triple engines of rapid financialisation, clean energy transition and digital revolution</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/fpis-offload-it-oil-gas-stocks-worth-13734-crore-in-march/articleshow/99375107.cms">FPIs offload IT, oil &amp; gas stocks worth ₹13,734 crore in March; remain net sellers of Indian stocks for 2 years running</a>

Super 20 equity funds that have managed to not only beat benchmarks but delivered the best returns in the last one year

<ul><li>We are bullish on gold and silver as a fund house due to 2 reasons – recession and under ownership, says Balasubramanian. </li><li>There may not be any further rate hikes as we are near the peak of the interest rate cycle, he adds. </li><li>An investor should look at passive investing as an additional investment avenue and not at the cost of large cap funds, he says. </li></ul>The start of the earnings season has been mixed, with IT services players disappointing the markets. Going forward too the trend is expected to remain mixed. While lower commodity prices will impair earnings of producers, the benefits will be reaped by consumers of energy and other commodities. In conversation with Business Insider India’s Malini Bhupta, A Balasubramanian, CEO of Aditya Birla Sun Life Mutual Fund, says that even though FY24 earnings could remain volatile due to a possible recession and high interest rates across the globe, but that does not mean all companies will be impacted in the same way. Domestic-driven sectors will fare better than exporters. Edited Excerpts: Markets have gone nowhere in the last 12-18 months. Will this dry run continue much longer and what should investors do? Markets keep going through bullish, bearish and consolidation phases at various intervals of time. We have been in a consolidation phase for the last 12-18 months. However, investors should invest for the long-term and the attractiveness of India remains very high in that context compared to the rest of the world. Indian equities have been resilient despite the interest rate movements. Valuations would get adjusted as rates start coming down and as a result equities will start reflecting momentum once again. Earnings trajectory has been on the upswing, but this fiscal year has already started seeing downgrades. What will impact earnings in FY24? FY24 earnings could remain volatile due to a possible recession and high interest rate scenario across the globe. Earnings volatility will impact stock prices but that does not mean all companies will be impacted in the same way. Some companies will benefit from lower energy prices, some will gain from rural recovery while export driven industries are likely to face some headwinds. From a returns point of view, ETFs are beating most large cap actively managed funds. What does this trend portend for investors? Index based investing is on the rise and has been gaining popularity. However, it should be looked upon from an allocation perspective. An investor should look at passive investing as an additional investment avenue and not at the cost of large cap funds. What kind of returns can investors expect this year? Returns should not be measured on a one-year basis as a good year can be followed by a bad year and vice versa. One should look at the cumulative returns delivered by equities over the long-term as an asset class. Equities tend to return nominal GDP + 3% and I expect good returns to be generated over the next 3 years. A lot of thematic funds have been launched. Are these funds launched to garner AUM or are these opportunities that fund houses are seeing in the market? Thematic funds should be looked at opportunities to invest in a particular theme and from an asset allocation point of view. Themes can be structural or cyclical in nature and go through their fair share of volatility. IT, banking, manufacturing, consumption and MNC are some of the themes offered by Aditya Birla Sun Life Mutual Fund. Average age of benchmark indices have been coming down. What is the reason for that and how does it impact stock picking? New technologies are coming and acceptance of these on both the investor and consumer side has grown significantly. Companies get included or excluded from an index basis the methodology followed by the exchanges. Some of the long-lasting businesses have been part of the index for over 2 decades while some companies that have survived have still been excluded from the index. It does not mean that those that are removed are bad except that they have not grown as much as others or those that are included are good. The large groups in business will remain relevant. Given that interest rates have gone up, is this the right time to invest in fixed income? The current attractiveness of debt is higher if you compare the yield to the earnings yield of equities. A higher yield implies high cost of capital which is unfavourable for equities. However, I believe both will co-exist. Given the long-term tax benefits have been removed for debt funds, the question to be asked is whether investment is being made for tax benefit or for asset allocation purposes. Do you expect flows into debt to be impacted by the recent tax changes? It will have some impact as those who have been considering these instruments for the long-term will be impacted. However, 70-80% inflows have been coming in for 1-2 years and not just for tax benefit. Those flows will continue. Secondly, mutual funds fixed income recognition is different from others, which is short-term capital gains accrual. Therefore, it gives some leeway to adjust against short-term capital losses. Also in growth funds, you can accrue the gains and not withdraw it so that you only pay tax on withdrawal. Will the Reserve Bank of India’s pause on rates be a prolonged one? There may not be any further rate hikes as we are near the peak of the interest rate cycle. I expect the rates to hover near the current levels for the next one year and interest rate cuts may only start next year onwards. Moreover, the rate cuts may not be as aggressive as the hikes. Is the inflation battle under control? Energy prices are a true indicator of inflation and the recent correction in gas and energy prices has arrested the fear of inflation going up further. On one hand, the production cut from OPEC will prevent a further fall while on the other hand, the government of India has ensured there are no supply side disruptions which can lead to higher prices. Given the geopolitical risks and what’s happening to the dollar, what is your view on gold and silver? We are bullish on gold and silver as a fund house due to 2 reasons – recession and under ownership. We have been advocating a multi-asset allocation strategy which invests in equity, debt and gold.

Earnings to remain volatile in FY24, but some sectors will benefit from lower energy prices, says Aditya Birla Sun Life MF’s CEO A Balasubramanian

Adani Transmission, Adani Total Gas dropped by MSCI, stocks tumble 5%

<img class="gwt-Image" src="/photo/47702982.cms" /> 
Making India green is the Centre’s one of the prime objectives. And taking the initiative to a new level is SunEdison, the largest renewable energy development company in the world by generation capacity. As per a news report by The Economic Times, SunEdison has signed a definitive agreement to acquire Mumbai-based Continuum Wind Energy. While currently only 20 GW of wind farms operate in India, this buyout will help achieve Modi’s ambitious target of generating 100 GW renewable energy by 2022. 
 The Belmont, California headquartered SunEdison, which is listed on <keyword id="6357328" type="COMPANY" weightage="20" keywordseo="NASDAQ">Nasdaq</keyword>, will take over 242 MW of operating wind assets that Continuum owns and operates in Maharastra and Gujarat as well as 170 MW of assets under contruction. The company also has 1000 MW of plants in development across 6 states. This will be the third wind buy for SunEdison - In May, they acquired two renewable energy portfolios, including the domestic portfolio of around 100 MW of Spain-based FersaEnergias Renovables, SA. 
 
 
Sun Edison has not disclosed the deal value in any official communication, but sources close to the transaction said Continuum Wind Energy has been valued at Rs 3,720-3,900 crore ($620-650 million), inclusive of its debt. The equity value alone has been pegged at around Rs 1,920 crore ($320 million). Analysts tracking the sector estimate that the company should close FY15 with Rs 400 crore of revenue. The deal is expected to close in the next 6-8 weeks. 
 "India is a core market for SunEdison and offers tremendous growth opportunities in both wind and solar energy. We made a commitment to Prime Minister Modi that we will deliver 15.2 GW of renewable energy by 2022. We are putting our money where our mouth is," Pashupathy Gopalan, President of SunEdison, Asia Pacific told ET on a call from <keyword id="6355117" type="COUNTRY" weightage="20" keywordseo="South-Africa">South Africa</keyword>. 
 Originally founded by an investment banker turned green energy entrepreneuer <keyword id="252259" type="PERSON" weightage="20" keywordseo="Arvind-Bansal">Arvind Bansal</keyword> and his IIM-Ahmedabad classmate Vikash Saraf of Essar Group, Continuum Wind Energy was controlled by <keyword id="48670" type="CITY" weightage="20" keywordseo="Morgan-Stanley">Morgan Stanley</keyword>'s infrastructure focussed private equity fund -- Morgan Stanley Infrastructure (MSI). MSI, a $4 billion global platform, is part of the global <keyword id="6354241" type="COMPANY" weightage="20" keywordseo="Financial-Services">financial services</keyword> firm's direct private investment group. In 2012, MSI had invested $200 million (Rs 1200 crore) into the company through a convertible instrument to buy a majority stake. Till date they have already deployed around $160 million, said sources. 
 
Both MSI and the erstwhile promoters are cashing out post the takeover but Bansal and the senior management will stay on for a minimum transitory period of 3-4 years running the operations, said officials in the know. 
 
"Our aspirations of growth is mutual. With a large strategic like SunEdison, we will now be able to finance our growth and not worry about giving exits like we would have had to with PE partners," said Bansal. "We have in-house development capacities and we build our own projects instead of buying them on a turn-key basis. That's what help us stand out." 
 <keyword id="273896" type="PERSON" weightage="20" keywordseo="Raja-Parthasarathy">Raja Parthasarathy</keyword> and SG Shyam Sundar the two MDs and Co-Heads, MSI in India were not available for comment till the time of going to press. Back of the envelope calculation shows, MSI will make 1.66 times return in 3 years in dollar terms --- commendable considering the sharp depriciation of the rupee in the same period. The founder duo are expected to make a rake in 4.6 times their initial investment, said analysts. 
 
Buoyed by the government's push towards green energy, SunEdison has charted out an ambitious play in India. Gopalan said, of the 15 GW that his company plans to install in India, 10 GW will be solar with the rest predominantly wind. "Solar may be the number 1 resource in India but we are yet to see the best of wind. There is enough room for growth," he added. Earlier this year, the company signed an agreement with Adani Enterprises for a $4 bn JV to build solar panels in Gujarat. 
 
SunEdison has been scaling up especially in wind. Globally too, they are adding to their wind portfolio significantly through large buyouts. Last November, it agreed to take over First Wind, one of the largest wind power developers in the United States, for $2.4 billion - making it the largest player in one shot. That aquisition will expand SunEdison's project installation pipeline for 2015 by an estimated 500 megawatts. 
 MSI and Bansal had mandated investment banks in 2013 to secure additional equity funding of close to $200 million from PE or strategic players. However discussions then with global utility firms like GDF and some from <keyword id="8695" type="COUNTRY" weightage="20" keywordseo="Malaysia">Malaysia</keyword> and <keyword id="3739" type="COUNTRY" weightage="20" keywordseo="Thailand">Thailand</keyword> did not progress much. More recently, talks with Malaysia's SWF Khazanah and IFC - an existing lender of the company - had also evaluated the prospect of coming on board. 
 
Other than being a cleaner option and a massive employment generating opportunity, prospects of renewable energy has improved considerably since the economics of green power has improved considerably. Wind power is almost close to grid parity as it almost comparable to imported coal in terms of cost. The prices of turbines and other equipment have also come down over the last few years. So have the prices for solar panels. 
 Foreign investors too are also becoming for perceptive to the opportunities. Earlier this February Sembcorp Utilities, a wholly owned subsidiary of <keyword id="158901" type="COMPANY" weightage="20" keywordseo="Sembcorp-Industries">Sembcorp Industries</keyword>, Singapore's leading utilities and marine group, took a controlling 60% stake in <keyword id="836163" type="COMPANY" weightage="20" keywordseo="Green-Infra">Green Infra</keyword> - a leading renewable energy platform -- from its private equity owners IDFC Alternatives for Rs 1051 crore. This was their first investment in the space in India, after backing two coastal thermal coal projects in Andhra Pradesh since 2011. This was also the first and only FDI into the power sector in India in the last one year of the <keyword id="6387077" type="ORGANIZATION" weightage="20" keywordseo="Narendra-Modi-government">Narendra Modi government</keyword>.

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