Mutual Fund Industry Update: AUM Reaches Rs 80.8 Lakh Crore in November
The mutual fund industry in India has achieved a significant milestone, with total assets under management (AUM) soaring to Rs 80.80 lakh crore in November. This represents an impressive 18.7% increase from Rs 68.08 lakh crore a year earlier. 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 reached Rs 29,445 crore, reflecting a 16% year-on-year growth and indicating a growing trend among investors.
Growth in Systematic Investment Plans
The rise in SIP flows is particularly noteworthy, as they have doubled in less than three years. The average SIP ticket size has also increased, now standing at Rs 2,939 per month, compared to Rs 2,476 a year ago. This trend suggests that participation in mutual funds is expanding to higher-income segments. Over the past 12 months, aggregate SIP flows reached Rs 3.30 lakh crore, marking a 27% increase from Rs 2.59 lakh crore during the same period last year. This growth in SIPs highlights the increasing confidence of investors in mutual funds as a viable investment option.
Expansion of Investor Base
The mutual fund industry has also seen a significant increase in the number of unique investor accounts, which reached 5.84 crore in November. Over the past year, the industry added 66 lakh new investors, indicating a shift beyond traditional metropolitan areas. New account registrations climbed to 57.14 lakh in November, up from 49.47 lakh a year earlier. This expansion reflects the industry’s efforts to penetrate deeper into semi-urban populations, with smaller metropolitan and tier-2 cities now accounting for 35% of the total AUM, compared to just 26% in September 2020.
Equity Funds and Passive Investments
Equity-oriented funds continue to dominate the mutual fund landscape, holding approximately 60.2% of the industry’s AUM, which translates to around Rs 58.26 lakh crore. Within this category, SIPs have gained prominence, representing 28.4% of total equity AUM, an increase from 27.5% a year ago. The positive momentum in equity net sales has persisted for 57 consecutive months. Additionally, passive fund investments have grown by 24.3% year-on-year, reaching Rs 13.72 lakh crore, and now account for 17% of total AUM. This trend indicates a structural shift towards low-cost, index-based investment strategies.
Impact on Financial Landscape
The mutual fund industry’s significance in the financial sector is on the rise, with AUM now representing 33.3% of bank deposits, up from 31.2% a year ago. Individual investors, including both retail and high-net-worth categories, comprise 60% of the total industry AUM, with assets growing 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 experienced net outflows of Rs 2.9 lakh crore. This trend underscores the industry’s reliance on strong domestic capital flows for continued growth.
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