The mutual fund industry in India has reached a remarkable milestone, with total assets under management (AUM) climbing to Rs 80.80 lakh crore in November. This marks an impressive 18.7% increase from Rs 68.08 lakh crore a year prior. According to Franklin Templeton’s “Mutual Fund Industry Dashboard,” the sector added over Rs 12.7 lakh crore to its asset base in the past year. Additionally, monthly systematic investment plan (SIP) flows surged to Rs 29,445 crore, reflecting a 16% year-on-year growth and highlighting a burgeoning trend among investors.
Growth in Systematic Investment Plans
SIP flows have shown remarkable growth, having doubled in less than three years. The average SIP ticket size has also seen an increase, now standing at Rs 2,939 per month, up from Rs 2,476 a year ago. This trend indicates a broader participation in mutual funds, particularly among higher-income segments. Over the past 12 months, total SIP flows have reached Rs 3.30 lakh crore, marking a 27% increase from Rs 2.59 lakh crore during the same timeframe last year. This growth underscores the rising confidence of investors in mutual funds as a desirable investment avenue.
Expansion of Investor Base
The mutual fund industry has experienced a significant rise in the number of unique investor accounts, which reached 5.84 crore in November. Over the last year, the industry added 66 lakh new investors, reflecting a shift beyond traditional metropolitan areas. New account registrations rose to 57.14 lakh in November, compared to 49.47 lakh a year earlier. This growth illustrates the industry’s initiatives to penetrate deeper into semi-urban populations, with smaller metropolitan and tier-2 cities now representing 35% of the total AUM, up from just 26% in September 2020.
Equity Funds and Passive Investments
Equity-oriented funds dominate the mutual fund landscape, accounting for around 60.2% of the industry’s AUM, which amounts to approximately Rs 58.26 lakh crore. Within this category, SIPs have gained traction, making up 28.4% of total equity AUM, up from 27.5% a year ago. The positive momentum in equity net sales has continued for 57 consecutive months. Furthermore, passive fund investments have increased by 24.3% year-on-year, reaching Rs 13.72 lakh crore and now comprising 17% of total AUM. This trend reflects a structural shift towards low-cost, index-based investment strategies.
Impact on Financial Landscape
The mutual fund industry’s role in the financial sector is growing, with AUM now accounting for 33.3% of bank deposits, an increase from 31.2% a year ago. Individual investors, including both retail and high-net-worth categories, constitute 60% of the total industry AUM, with assets expanding at a compound annual growth rate of 23% over the past decade. Domestic institutional investors have generated net inflows of Rs 7.4 lakh crore in the last 12 months, while foreign portfolio investors faced net outflows of Rs 2.9 lakh crore. This trend highlights the industry’s dependence on robust domestic capital flows for sustained growth.
Digihunt is not a financial advisor and this is not investment advice.