5 innovation thematic funds posted over 15% returns in 1 year, with Bandhan leading the category; no scheme in the red

Innovation funds are a type of equity thematic mutual fund that invests in businesses at the forefront of emerging technologies, new ideas, and disruptive trends.

They are designed for investors looking to gain exposure to companies that could benefit from innovation and technological advances.

According to the Value Research data list, there are 13 innovation-focused thematic funds. Of these, five funds delivered more than 15% returns over the last one year, while none of the funds in the category gave negative returns during this period.

Which innovation funds gave the highest returns in 1 year?

Bandhan Innovation Fund topped the category with a 21.54% return over the last one year, followed by HDFC Innovation Fund at 18.89%.

Axis Innovation Fund and Union Innovation & Opportunities Fund delivered 16.91% and 15.27%, respectively. Motilal Oswal Innovation Opportunities Fund was next, with a 15.16% return.

Which innovation funds gave the lowest returns in 1 year?

At the other end of the spectrum, UTI Innovation Fund delivered the lowest return in the category at 2.43%.

Tata India Innovation Fund and Nippon India Innovation Fund followed with returns of 4.94% and 5.46%, respectively.

How do the portfolios of innovation funds differ?

A quick comparison of the highest- and lowest-performing funds shows that, despite belonging to the same innovation-focused category, their portfolios are significantly different.

Bandhan Innovation Fund had 97.87% of its portfolio in equities, 0.01% in debt, and 2.12% in cash and cash equivalents. However, UTI Innovation Fund had 97.42% in equities, 0.02% in debt, and 2.56% in cash and cash equivalents.

The bigger difference emerges in their market-cap allocation.

Bandhan has a relatively more balanced allocation across large-, mid- and small-cap stocks, while UTI Innovation Fund has a much higher exposure to small caps.

The sector allocation also highlights the difference in investment strategies.

Bandhan Fund has its largest exposure to consumer discretionary (21.05%), followed by financials (15.83%).

On the other hand, UTI Fund is heavily tilted towards technology (42.74%) and industrials (30.17%). This shows that even within the same thematic category, funds can take very different approaches to investing in innovation.

The difference is also visible in their stock holdings. Bandhan holds 81 stocks, reflecting its broader diversification, while UTI holds only 31 stocks, resulting in a more concentrated portfolio.

Disclaimer: This is purely for educational/informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.