Arriving At The Most Preferred Sectors Of Mutual Funds

Mutual funds are continuously buying and selling specific stocks. Here we look at the accretion in AUM of mutual funds sector wise. A word of caution. AUM is not entirely buying but also happens due to price appreciation, but it still gives a rough idea of which way the wind is blowing in terms of mutual fund preferences. For June, the table below captures the 15 most preferred sectors in terms of average AUM accretion. What we have done is to rank mutual fund AUM accretion on absolute growth and percentage growth and then take an average of ranks to factor size and momentum together.

A Macro Picture Of Equity Aum And The Top Sectors

The overall exposure of mutual funds to equities (including equity funds, hybrid fund, and passive funds) as of end June 2025 stood at ₹47.11 trillion. This compares favourably with an AUM of ₹41.11 trillion as of end March 2025 and ₹38.67 trillion at the end of June 2024. In fact, between June 2024 and June 2025, there has been overall equity AUM accretion of ₹8.43 trillion or 21.81%. The question is whether the above ranking by average growth is reflective. If you look at overall AUM of 30 sectors as of June 2025, the top-5 account for 45.2%; but top-5 account for 62.8% of AUM growth. That is the key!

Five Most Preferred Sectors Of Mutual Funds – June 2025

If you compare the June 2025 story with June 2024; the leaders are approximately the same, although chemicals has come up to second place. Let us look at in greater detail.

• Retail continued to hold top spot in overall MF preference rankings. This was led by the funds getting interested in digital retail stocks like Eternal and Swiggy.

• Chemicals & Fertilizers have emerged as the second most preferred sector for mutual funds. This is a bet on the changing equation of chemical stocks in the value chain.

• Despite the uncertainty over US tariffs, the pharma sector continues to be a major preferred sector for MFs, largely as a defensive play on cheap US healthcare needs.

• BFSI continues to be the preferred sectors, both due to its size and due to its largely depleted weight in the index. Banks and NBFCs are the best domestic play on India.

• Aviation is the fifth most preferred sector among mutual funds. Apart from the interest in Indigo’s leadership story, SpiceJet also gained on its legal victory.

The broad MF buying theme appears to be predicated on the India domestic story and focusing on the Indian consumer plays. Chemicals is more of a global supply chain play.