Mutual Funds Industry in India

Introduction

The mutual fund industry in India has emerged as a significant player in the financial services sector, facilitating investment for millions of retail and institutional investors. With a diverse range of schemes catering to various investment goals and risk appetites, mutual funds have transformed the investment landscape in India, promoting financial inclusion and literacy.

Key Highlights

Total AUM: The total Assets Under Management (AUM) as of August 31, 2024, was USD 804 Billion
Decadal Growth: The AUM increased from USD 122 Billion on August 31, 2014, to USD 804 Billion in 2024, representing a more than sixfold increase in ten years
Five-Year Growth: The AUM grew from USD 307 Billion on August 31, 2019, to USD 804 Billion in 2024, marking a more than twofold increase in five years
Folios Milestone: The mutual fund industry crossed 100 Million folios in May 2021. As of August 31, 2024, the total number of folios stood at 204.5 Million
Retail Investor Participation: Retail investors account for 48-50% of the total AUM
SIP Accounts: There were 96.1 Million total SIP accounts in India as of August 2024
SIP Contribution Growth: SIP contributions doubled between 2021 and 2024
Monthly SIP Inflows: Monthly SIP inflows reached USD 2.83 Billion as of August 2024

Types of Mutual Funds in India

Equity Mutual Funds

Primarily invest in stocks for long-term capital appreciation.

Debt Mutual Funds

Focus on fixed-income securities like bonds and debentures for stable returns.

Hybrid Mutual Funds

Combine investments in both equity and debt to balance risk and return.

Index Funds

Aim to replicate the performance of a specific market index, following a passive investment strategy.

Exchange-Traded Funds (ETFs)

Traded like shares on stock exchanges, usually tracking an index with high liquidity.

What’s new in Mutual Fund Industry in India?

The Indian mutual fund industry has witnessed significant innovations, including:

Digital Platforms: The rise of technology has enabled seamless online transactions, making it easier for investors to access mutual funds. Mobile applications and robo-advisory services have further democratized investment
Thematic Funds: The introduction of thematic and sectoral funds allows investors to capitalize on specific trends or sectors, enhancing portfolio diversification
ESG Funds: Environmental, Social, and Governance (ESG) funds are gaining traction as investors increasingly prioritize sustainability in their investment choices
Flexible SIPs: Innovations such as flexible SIPs, which allow investors to change their SIP amounts based on their financial circumstances, are becoming popular

Growth Drivers

Rising Financial Literacy: Increased awareness and education about financial products have encouraged retail participation
Technological Advancements: The integration of technology in investment platforms and advisory services has made mutual funds more accessible to a broader audience
Demographic Trends: With a young population increasingly interested in wealth creation, the demand for mutual funds continues to rise
Economic Recovery: The post-pandemic economic recovery has boosted investor confidence, leading to greater investments in equity markets
Diverse Product Offerings: The introduction of various mutual fund products catering to different risk appetites and investment goals has attracted a wide range of investors

Global Involvement in the Indian Mutual Fund Industry

Attraction of International Players: Several global asset management firms are entering the Indian market, recognizing its potential for growth and diversification
Collaborations and Partnerships: Domestic mutual fund houses are forming partnerships with international firms to leverage expertise and best practices in fund management
Regulatory Framework: SEBI (Securities and Exchange Board of India) is creating a conducive environment for foreign investment in mutual funds, promoting cross-border fund offerings
Global Trends Influence: The Indian mutual fund industry is adopting global trends, such as ESG (Environmental, Social, and Governance) investing, influenced by international investor preferences

Source – Association of Mutual Funds in India

Types of Mutual Funds in India

Equity Mutual Funds: Primarily invest in stocks for long-term capital appreciation.
Debt Mutual Funds: Focus on fixed-income securities like bonds and debentures for stable returns.
Hybrid Mutual Funds: Combine investments in both equity and debt to balance risk and return.
Index Funds: Aim to replicate the performance of a specific market index, following a passive investment strategy.
Exchange-Traded Funds (ETFs): Traded like shares on stock exchanges, usually tracking an index with high liquidity.

Top 10 Mutual Funds AMC houses in India

Fund House	AUM
SBI Mutual Fund	USD 133 Bn
ICICI Prudential Mutual Fund	USD 106 Bn
HDFC Mutual Funds	USD 94 Bn
Nippon India Mutual Funds	USD 67 Bn
Kotak Mutual Funds	USD 57 Bn
Aditya Birla Capital	USD 46 Bn
Axis Mutual Funds	USD 38 Bn
UTI Mutual Funds	USD 38 Bn
Mirae Asset Mutual Funds	USD 23 Bn
Tata Mutual Funds	USD 21 Bn

What’s new in Mutual Fund Industry in India?

The Indian mutual fund industry has witnessed significant innovations, including:

Digital Platforms: The rise of technology has enabled seamless online transactions, making it easier for investors to access mutual funds. Mobile applications and robo-advisory services have further democratized investment
Thematic Funds: The introduction of thematic and sectoral funds allows investors to capitalize on specific trends or sectors, enhancing portfolio diversification
ESG Funds: Environmental, Social, and Governance (ESG) funds are gaining traction as investors increasingly prioritize sustainability in their investment choices
Flexible SIPs: Innovations such as flexible SIPs, which allow investors to change their SIP amounts based on their financial circumstances, are becoming popular

Growth Drivers

Rising Financial Literacy: Increased awareness and education about financial products have encouraged retail participation
Technological Advancements: The integration of technology in investment platforms and advisory services has made mutual funds more accessible to a broader audience
Demographic Trends: With a young population increasingly interested in wealth creation, the demand for mutual funds continues to rise
Economic Recovery: The post-pandemic economic recovery has boosted investor confidence, leading to greater investments in equity markets
Diverse Product Offerings: The introduction of various mutual fund products catering to different risk appetites and investment goals has attracted a wide range of investors

Global Involvement in the Indian Mutual Fund Industry

Attraction of International Players: Several global asset management firms are entering the Indian market, recognizing its potential for growth and diversification
Collaborations and Partnerships: Domestic mutual fund houses are forming partnerships with international firms to leverage expertise and best practices in fund management
Regulatory Framework: SEBI (Securities and Exchange Board of India) is creating a conducive environment for foreign investment in mutual funds, promoting cross-border fund offerings
Global Trends Influence: The Indian mutual fund industry is adopting global trends, such as ESG (Environmental, Social, and Governance) investing, influenced by international investor preferences

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India Growth Fund Aust. Pty Ltd ACN 679 187 994 (IGF) as a corporate authorised representative (CAR: 1313345) of Non Correlated Advisors Pty Ltd ACN 158 314 982 AFSL 430126 (NCA). IGF is authorised to advise and deal in wholesale investors only as that term is defined in the Corporations Act 2001. IGF is only authorised to provide you with general information. Under no circumstances does IGF take into account the investment objectives, financial situation or particular needs of any particular person. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. You are advised to obtain your own investment, financial, tax and legal advice before taking any action. Neither IGF, NCA nor any of their related parties, their employees or directors, officers, provide any warranty of accuracy or reliability in relation to such information or accept any liability to any person who relies on it. You should obtain professional advice and read the Fund’s information memorandum (IM) before making a decision in relation to this product. Any forecasts and hypothetical examples are subject to uncertainty and are not guaranteed and should not be relied upon. Past performance is not a reliable indicator of future performance. The information contained in the presentation are confidential and may not be reproduced in whole or in part. If the content of this publication (and/or presentation) conflict with any terms of the IM, then the terms of the IM govern.

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