As of March 2025, over 15.3 crore mutual fund folios exist in India, according to data from the Association of Mutual Funds in India (AMFI). This dramatic growth is partially because of the influence of these so-called “Financial Experts.”

That’s why everyone nowadays want to invest in SIPs and earn a 12% YOY return.

A 2024 study by Morningstar India revealed a startling trend—more than 70% of first-time investors in their 20s and 30s now prefer mutual funds over traditional options like FDs or PPFs.

While mutual fund returns can vary significantly depending on the market and the category of the fund, historical data shows that equity-oriented mutual funds generally deliver returns ranging from 10% to 18% annually, while debt funds typically offer 6% to 9%.

But what happens when a fund beats all expectations and delivers over 20% in its very first year?

This Mutual Fund Delivered a 20.98% Return in Its 1st Year

One such outperformer is the Bandhan Innovation Fund, which completed its first anniversary on May 30, 2025. In its inaugural year, this fund delivered an impressive return of 20.98%, outpacing its benchmark Nifty 500 TRI, which grew just 9.05% during the same period.

Read More – Why Multi-Asset Funds Are the Hottest Investment Trend in 2025

What makes this performance notable is that the Bandhan Innovation Fund was launched in a relatively volatile market, yet it managed to fight through macroeconomic shifts and still deliver strong returns.

Such early outperformance has drawn significant attention from investors looking for growth-oriented opportunities in mutual funds.

Where Does Bandhan Innovation Mutual Fund Invest Your Money?

The Bandhan Innovation Fund follows a multi-cap approach, investing across companies of different market capitalisations. Its investment strategy revolves around three key innovation categories:

Leading Innovators – Well-established companies leading innovation in their sector.
Rising Innovators – Companies in the mid-stage of development with scalable innovation.
Emerging Innovators – Newer, high-potential firms with disruptive ideas.

This fund operates on a growth-quality investing principle, aiming to strike a balance between high-growth potential and strong business fundamentals. The fund’s primary goal is to offer superior long-term returns while minimising downside risks, making it a compelling choice for growth-seeking investors.

In What Sectors Has Bandhan Innovation Fund Invested?

The amazing returns of Bandhan Innovation Fund can largely be attributed to sectoral positioning and brilliant stock selection, particularly in the Healthcare and Financial Services segments.

Here’s a closer look at its current sectoral allocation:

Overweight on:
- Healthcare
- Consumer Durables
- Consumer Services
Underweight in:
- FMCG
- Financial Services
- Oil & Gas

Performance Snapshot (as of May 30, 2025)

Plan Type	1-Year Return	Since Inception (CAGR)
Regular Plan	20.98%	20.26%
Direct Plan	22.89%	22.18%
Benchmark (Nifty 500 TRI)	9.05%	NA

This smart allocation strategy—favouring sectors with strong post-COVID recovery and long-term demand—has helped the fund consistently beat its benchmark.

Should You Invest in Small Cap, Mid Cap, Large Cap, or Multi Cap?

One of the biggest dilemmas for mutual fund investors is deciding which category to choose. Here's a quick comparison to help you make an informed decision:

Category	Market Cap Focus	Risk Level	Return Potential	Ideal For
Large Cap	Top 100 listed companies	Low	Moderate (8–12%)	Conservative long-term investors
Mid Cap	101st–250th listed cos	Medium	High (10–15%)	Moderate risk-takers
Small Cap	251st onward	High	Very High (12–20%+)	Aggressive investors with a long horizon
Multi Cap	Mix of all market caps	Medium-High	Balanced (10–18%)	Investors seeking diversification

The Bandhan Innovation Fund, being a multi-cap, offers the advantage of diversification across different segments—helping reduce risk without compromising too much on returns.

Conclusion

The first-year performance of Bandhan Innovation Fund proves that smart investing and sectoral focus can lead to exceptional returns—even in a relatively short time frame. With a CAGR of over 22% under its Direct Plan and a diversified investment strategy that spans high-potential innovators, the fund presents a compelling case for investors with a medium- to long-term horizon.

However, as with all market-linked investments, it’s important to assess your risk appetite and financial goals and consult a qualified advisor before investing. While past performance is promising, it does not guarantee future results.

Also Read - How to Invest in Mutual Funds – Complete Beginner’s Guide

Still, for those seeking a fund that combines innovation, strategy, and strong early returns, Bandhan Innovation Fund might just be the growth opportunity worth exploring.

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