India’s manufacturing sector is undergoing a structural transformation. From Make in India to Production Linked Incentive (PLI) schemes, the policy push has been consistent. Add to that a favourable demographic, growing domestic consumption, and global supply chain diversification and you have a compelling long-term investment story.
For investors looking to ride this wave, mutual funds focused on the manufacturing sector offer a diversified and professionally managed route. Below, we explore the top 5 mutual funds in this space based on AUM, performance, and portfolio strategy.
1. HDFC Manufacturing Fund – Regular Growth
Launched in May 2024, this is one of the newest entrants but has already amassed a massive AUM of ₹12,170 crores. It indicates strong investor confidence in both the fund house and the theme. The fund is highly equity-oriented, with over 98% allocation to equities and minimal exposure elsewhere.
Its portfolio is well-diversified across large-cap (57.3%), mid-cap (19.5%), and small-cap (21.9%) stocks. The fund's beta stands at 1.4, indicating a higher sensitivity to market movements, while Jensen's Alpha of 0.9 suggests it’s delivering some excess return over the expected.
Managed by Rakesh Sethia, the fund has shown quick traction in returns, especially over 1-month and 3-month periods, reflecting the team’s early conviction plays.
2. ICICI Prudential Manufacturing Fund – Growth
With an inception date of October 2018, this fund is among the older and more seasoned ones in the manufacturing space. It has an AUM of ₹6,761 crores and a current NAV of ₹35.3.
Its equity allocation is 97.4%, with a fairly balanced spread across large caps (43.7%), mid caps (24%), and small caps (29.7%). It has a slightly higher beta of 2.6, meaning it's more volatile but also has greater upside potential. Jensen’s Alpha stands at 1.0, which is a positive sign.
The fund is co-managed by Anish Tawakley and Lalit Kumar, both experienced in managing thematic and cyclical portfolios. Over the past 3 and 5 years, the fund has delivered impressive compounded returns, benefiting from early positions in key manufacturing sub-segments.
3. Axis India Manufacturing Fund – Regular Growth
Axis launched this fund in December 2023 and it has already built a respectable AUM of ₹5,576 crores. Its portfolio allocation is heavily skewed towards large-cap stocks (59.2%), offering a more stable investment experience. Mid- and small-caps are present but with lower weights (23.8% and 16.2% respectively).
With a beta of 0.8, this is one of the less volatile options in the manufacturing space. Its Jensen's Alpha of 1.0 shows efficient stock selection. The fund managers: Shreyash Devalkar and Nitin Arora are known for their quality-conscious investment approach, which reflects in the relatively stable NAV movements.
This fund suits investors looking for manufacturing exposure with a slightly conservative tilt.
4. Kotak Manufacture in India Fund – Regular Growth
Started in February 2022, the Kotak fund has grown to an AUM of ₹2,510 crores. It has a strong bias towards large- and mid-cap stocks, with allocations of 51.6% and 29.9% respectively. Small caps make up around 16.6%.
Its beta of 1.9 shows it carries moderate market risk, and Jensen’s Alpha of 0.9 points to strong active management. Fund managers Harsha Upadhyaya and Abhishek Bisen bring together equity and macroeconomic perspectives , a useful combination for a theme that is both policy- and cycle-driven.
Its consistent 1-year and 3-month returns make it a contender for medium-term investors.
5. Canara Robeco Manufacturing Fund – Regular Growth
The most recent among the five, this fund was launched in March 2024. Despite being new, it has managed to collect an AUM of ₹1,671 crores. It shows promise due to its relatively diversified allocation across mid (24.5%) and small caps (25.1%), while large caps still hold the largest chunk at 46.1%.
Its beta of 4.2 is the highest among the peers, indicating very high volatility suitable for investors with higher risk appetite. However, its Jensen’s Alpha of 1.1 is the highest among the five, showing superior stock selection so far.
Pranav Gokhale and Shridatta Bhandwaldar lead the fund, both known for strong research backgrounds and nimble portfolio decisions.
Final Thoughts
The manufacturing story in India is far from a short-term play — it is a decade-long journey. These mutual funds offer exposure to key themes like capital goods, industrial automation, defence, logistics, and specialty chemicals.
While choosing a fund, always align your risk appetite with the portfolio’s beta and asset mix. For conservative investors, Axis or Kotak might suit better. For more aggressive investors, ICICI Pru and Canara Robeco offer high-growth, high-volatility options. HDFC’s new fund is already commanding attention with scale and potential.
Before investing, do consult a financial advisor and review the fund’s offer documents. But if you believe in India’s manufacturing renaissance, now might be a good time to get on board.
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