How Energy Sector Mutual Funds Are Transforming Ordinary Portfolios in 2024

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Are you aware that India has the 3rd largest share in the global energy sector after China and the US? Yes with a growing population and hope for a greener future, the government’s interim budget for 2024 has put a lot of focus on this sector to meet the growing demand for energy supply. This reliability has made Energy Sector Mutual Funds a profitable option for investors aiming for stable returns.

But how can you take advantage of this category to transform your ordinary portfolio into a solid one? Let's find that out.

Did you know big business giants in the Power & Renewable energy sector like Waaree gave 800% returns, Inox Wind Energy gave 500%, SJVN at 360% and Adani Power made 200% returns last year?

Yes, sounds too good to be true right? You can achieve these returns by investing in the best power sector mutual funds and become a part of the Pradhan Mantri Suryodaya Yojana.

Let’s check the 4 best green energy mutual funds to invest via SIP in 2024.

4 Best Energy Sector Mutual Funds India

1. DSP Natural Resources and New Energy Fund: Launched in 2008, it is the oldest fund in its thematic fund category. Its broad strategy covers energy sectors that are engaged in the production and selling of renewable resources like oil, gas, petroleum, metals etc. Furthermore, under the expertise of Mr, Rohit Singhania it has delivered 53.88% annualised returns surpassing its category of 49.8%, which is quite an outstanding quality you might want to add to your portfolio.
2. Tata Resources & Energy Fund: After being introduced on 28 December 2015, it quickly built its image as one of the trusted funds backed by the reputed image of the Tata Mutual Fund AMC. Keeping energy as its base, it has constructed a mixed portfolio combining the top Indian companies related to renewable energy production. Moreover, it is heavily invested in Equity with 98.12%, steadily increasing its earnings growth to 17.74% while also having an amazing portfolio turnover of 19% giving it stability and high earning margins to its investors.
3. SBI Energy Opportunities Fund: It is what you can call a pure breed as it solely follows its theme, which is power and new energy. Making its grand entry recently on 26th February 2024, it has taken a lot of limelight among investors. Well, of course, it not only talks big game but also has generated 38.48% cash flow overall which again gives you a strong reason to add this fund to your portfolio. Moreover, it supports the government's dream of sustainable energy adapting sectors of green energy value chains like solar, hydrogen, wind and batteries.
4. ICICI Prudential Energy Opportunities Fund: It has its own unique style combining PSU stocks with power and energy funds. You can take dual advantage by investing in this fund. If you look at its portfolio it has a major allocation of 97.21% in large cap stocks which makes it a reliable and steady option if you seek stability in your portfolio. Notably, this fund made up to 85% impressive returns in the last year. So, if you want you can start your SIP a just Rs.100 or go for lumpsum at just Rs.5000 only.

Energy Sector Mutual Funds Vs. Broader Market Funds: How the Distinction Matters?

General market Mutual Funds and index funds offer diversified access to all industries while energy sector mutual funds offer an industry-specific sector that is fast becoming critical to the global economy and sustainability.

Energy sector funds differ in the following ways:

1. Cyclicality: The performance of the energy sector is usually influenced strongly by such factors as cycles of the global economy and prices of commodities.
2. Specialization: These funds focus on a single part of the economy giving them more risk and a higher capacity for better returns during periods of growth.
3. Thematic exposure: Energy funds are not just investing in the overall market, which is likely to grow, but investing in the change that is likely to occur in energy production, distribution and consumption, which is going to be the major economic revolution of these coming decades.  

Final Note

To sum up, with a vision for a more sustainable future promoting the idea of using natural resources for your needs rather than greed, you share this great opportunity to invest in the best energy sector funds. Just remember, planning an investment for at least 5-7 years or more would be good and ultimately SIP is the evergreen strategy that takes you towards a balanced portfolio and turns it into a solid one.

Also Read

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2. Best Mutual Funds for Retirement in India 2024

3. Top 5 Manufacturing Sector Mutual Funds in India

4.  Best mutual funds for Power & Renewable Energy Sector in 2024