#BandhanMF #BandhanMFInnovationFundReturn #BandhanMFOutperformsNifty500TRI
Chandigarh: The Bandhan Innovation Fund has completed its first year since inception, making a notable mark in the mutual fund industry by delivering a 1-year return of 20.98% (Regular Plan) as of May 30, 2025. In doing so, it has significantly outperformed its benchmark index, the Nifty 500 Total Returns Index (TRI), which returned 9.05% over the same period.
The fund has also impressed under its Direct Plan, returning a robust 22.89% in its first year. Since inception on April 30, 2024, the fund has delivered 20.26% CAGR under the Regular Plan and 22.18% CAGR under the Direct Plan, signaling a strong start for investors who backed the thematic strategy early.
Multi-Cap Approach with an Innovation Theme
The Bandhan Innovation Fund operates with a multi-cap strategy, which gives it the flexibility to invest across market capitalizations. However, what distinguishes it from other equity mutual funds is its focused approach to identifying and investing in innovation-led businesses — companies that are leading or emerging players in their respective industries due to their forward-thinking strategies, products, or technology integration.
The fund segments its portfolio into three thematic buckets:
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Leading Innovators
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Rising Innovators
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Emerging Innovators
Each of these categories receives allocations typically ranging between 10% and 45%, allowing the fund to maintain a diversified and balanced portfolio across maturity stages of innovation. This structured framework is intended to balance high-growth opportunities with risk mitigation, ensuring that the fund doesn’t overly concentrate on early-stage or unproven companies.
Quality-Growth Tilt with Balanced Investment Style
The fund is managed by Mr. Manish Gunwani, Head of Equities at Bandhan Asset Management Company (AMC). A seasoned fund manager, Gunwani has positioned the scheme with a quality-growth investment tilt, targeting businesses with robust financial metrics, competitive advantages, and scalability.
“Our investment style lies somewhere between value and growth,” Gunwani explained. “We aim for companies that are financially sound but also offer strong earnings potential. The focus on innovation helps us identify disruptors and enablers who are ahead of the curve in their industries.”
This hybrid investment style — not strictly value or high-growth — helps the fund remain adaptive to changing market conditions, providing investors with a more balanced risk-reward profile.
Sectoral Bets Pay Off
A key factor contributing to the fund’s strong first-year performance has been its sectoral positioning and prudent stock selection, particularly in Healthcare and Financial Services. According to Bandhan AMC, these sectors offered attractive growth opportunities at reasonable valuations over the past year, enabling the fund to capitalize on both structural trends and cyclical recoveries.
As of now, the fund maintains an overweight position in Healthcare, Consumer Durables, and Consumer Services. Conversely, it is underweight in FMCG, Oil & Gas, and parts of the Financial Services sector, reflecting a tactical call based on current market dynamics and valuation considerations.
This agile approach to sectoral allocation demonstrates the fund’s ability to pivot according to emerging themes, market shifts, and investor sentiment, all while remaining anchored to its core innovation thesis.
A Thematic Play With Caution Advised
Despite the impressive performance in its inaugural year, investment experts caution that thematic mutual funds like the Bandhan Innovation Fund come with higher volatility and concentrated risk exposure. The fund’s focus on innovation can lead to periods of underperformance, especially during market downturns or when innovation-driven sectors face regulatory or macroeconomic headwinds.
Financial advisors typically recommend thematic funds as part of a satellite portfolio — a supplementary component that complements a core portfolio consisting of large-cap or diversified equity funds. The goal is to enhance long-term returns without compromising portfolio stability.
Investors should also remember that past performance is not indicative of future returns. While the Bandhan Innovation Fund’s strong debut is encouraging, market conditions can evolve rapidly, and sector-specific risks may impact returns. It is essential for investors to align such investments with their risk tolerance, time horizon, and financial goals.
Growing Appetite for Innovation-Based Strategies
The success of the Bandhan Innovation Fund comes at a time when Indian investors are increasingly exploring thematic and strategy-based equity funds, moving beyond traditional large-cap or multi-cap vehicles. Innovation as an investment theme has gained traction globally, driven by rapid technological change, the rise of digital ecosystems, and shifts in consumer behavior.
Bandhan AMC’s approach reflects this evolving landscape, offering investors a structured way to participate in the India growth story through a future-forward lens.
Conclusion
The Bandhan Innovation Fund has delivered a stellar first-year performance, nearly tripling the returns of its benchmark. Its structured approach to innovation, balanced investment style, and strong sectoral plays have contributed to its early success. However, as with all thematic investments, a cautious and informed approach is advised. Investors are encouraged to consult with financial advisors before allocating capital, ensuring that such thematic exposure fits well within their overall investment strategy.
