4 Best Energy Mutual Funds to Invest in in 2024

In India's interim budget for the fiscal year 2024-25, Finance Minister Nirmala Sitharaman reiterated the government's commitment to power one billion households using rooftop solar installations. The flagship initiative behind this effort, Pradhan Mantri Suryodaya Yojana, seeks to provide free electricity to these households by enabling them to produce their own solar power.

In her interim budget speech, Ms Sitharaman added: INRFree solar power supplies homes with 15,000 to 18,000 electricity per year, and the surplus is sold to electricity distribution companies. ”

The Budget released on February 2, 2024 clearly shows a notable spike in government spending on rooftop solar initiatives.spike from INR2,167 million in 2023-24 INR4,555 million in 2024-25, underscoring the government's dedication to promoting this renewable energy source. This is in line with the goals outlined in the Pradhan Mantri Suryodaya Yojana.

The increased allocation suggests the government is working to speed up coverage of the program, potentially electrifying more households through rooftop solar installations. This budget increase could impact the feasibility and timeline for achieving the billion electrification goal.

The expansion of India's solar power sector is driven by several factors, including the falling cost of solar technology, increasing demand for renewable energy, strong government support, and the proliferation of large-scale solar power projects that currently dominate installed capacity. Driven by key factors. The growth in India's solar energy sector is truly impressive and offers attractive prospects for potential investors.

Investing in solar energy stocks involves inherent risks. Therefore, mutual funds that allocate money to solar energy stocks could be a safer means to take advantage of the increasing demand for solar energy, coupled with increased government focus on this sector. For some investors, choosing a mutual fund that invests heavily in solar energy stocks may be a preferable choice. Some of the most popular mutual funds in the solar energy space include:

Tata Resources and Energy Fund

Tata Resources Energy Fund primarily targets companies operating in India's resources and energy sector, with a preference for large-cap stocks. The Fund primarily allocates investments to companies engaged in the resource sector (including metals, mining and commodities) and the energy sector (including oil, gas, power and renewable energy) within the Indian economy. It maintains a relatively modest portfolio size compared to certain other diversified equity funds.

As of January 2024, the fund has a notable allocation among market capitalizations, with 57.54% in large-cap stocks, followed by 26.01% in mid-cap stocks and 12.09% in small-cap stocks. This reflects a preference for long-established companies with large market capitalizations.

Although these funds are growth-focused in nature, investors should remember that the resources and energy sector is cyclical in nature. This means that our business results may fluctuate significantly depending on economic conditions and product prices. Please be aware and keep this inherent risk in mind before investing.

This means that investors must align their investment objectives with the goals of the fund. This fund is designed for long-term capital growth, suggesting it may not be well suited for those with short-term investment horizons.

Japan India Power and Infrastructure Fund

Japan India Power & Infrastructure Fund is an investment focused investment in equity and equity-related instruments of companies involved in or associated with India's power and infrastructure sectors, including power generation, transmission, distribution, renewable energy, construction, and construction. It's a trust. and transportation. The Fund's primary objective is to achieve long-term capital growth through investments in these companies.

As of January 2024, the Fund has $1 million worth of assets under management. INRThis shows great investor interest in this sector. The fund's performance is measured based on the Nifty Infrastructure TRI, which provides a basis for comparing its performance with India's broader infrastructure sector.

Investors who come in to invest their hard-earned money in this fund should note that sector-specific funds like this fund typically have a more intensive focus compared to diversified equity funds. You need to be careful. This concentration can lead to higher returns, but it also comes with higher risks. This highlights the importance of researching a fund's past performance, as it is important to assess its risk profile before making any investment decisions.

DSP Natural Resources and New Energy Fund

This is an open-ended equity mutual fund scheme offered by DSP Mutual Fund, which focuses on investing in companies in the natural resources and energy sector. These sectors include oil and gas, metals and mining, renewable energy, and utilities.

The Fund aims to achieve long-term capital growth by investing in a diversified portfolio of equity and equity-related instruments of companies involved in or associated with the natural resources and energy sector in India and around the world. Masu. Fund managers select stocks through a process of fundamental analysis, focusing on long-term sustainable growth potential.

This fund is suitable for investors with a long-term investment horizon of at least five years and who can tolerate high risk. It is also suitable for investors who expect the natural resources and energy sector to outperform the overall market over the long term.

Being a sector-specific fund, this means it holds a more concentrated portfolio compared to a diversified equity fund. This concentration can yield higher returns, but it also comes with higher risks. Investors should not only consider the inherent volatility of this fund, but also the high expense ratio, which can reduce overall returns.

SBI Energy Opportunity Fund

The focus on investing only in energy stocks is evident from the recent introduction of SBI Energy Opportunity Fund by SBI Mutual Fund. The fund's objective is to provide investors with long-term capital value enhancement by investing in stocks and equity-related products of companies involved in a variety of activities such as traditional and new energy exploration, production, distribution, transportation, and processing. is to provide opportunities for This includes, but is not limited to, sectors such as oil and gas, utilities, and power.

As a recent fund offering, it is difficult to predict the potential performance of this fund. However, looking at past performance, many of the investment trusts introduced by SBI Investment Trust have achieved strong results that exceed investors' expectations. For investors who are uninterested in the risks associated with investing in new fund offerings (NFOs) but are keen to pursue long-term capital growth, this fund may be a preferred option.

The scheme aims to invest in shares/equity-related instruments of companies involved in energy and related business activities and therefore may concentrate on companies within these sectors. Furthermore, given the specific mandate and resulting concentration, volatility or unfavorable performance of these sectors and/or the stocks associated with them can have a material impact on the performance of the Plan.

A glimpse of past achievements

Investing in mutual funds, regardless of their sector focus, inherently involves the risk that past performance may not accurately predict future results. While reviewing historical data can provide insight into a fund's strategy and performance history, market conditions, company performance, and economic factors can change significantly over time and may affect future returns. It is important to keep in mind that you can give.

Past performance serves as an important indicator not only of the fund manager's ability but also of the fund house's commitment to achieving optimal returns for investors. This highlights the importance of investors evaluating the last five or ten years of a fund's returns before deciding to invest their money.

Considering mutual funds as a vehicle for investing in energy stocks is promising for investors looking for long-term growth. However, it is important for investors to carefully consider both the potential benefits and risks. Diversifying your investments and matching them to your personal risk tolerance is essential. By making informed decisions, you can reduce risk and ensure reasonable returns over the long term.