India’s mutual fund industry and its prospects

Mutual funds pool money from investors to invest in various asset classes. These funds are managed by professional fund managers and aim for capital appreciation. Most importantly, people from various income brackets can invest in mutual funds with a minimum amount of ₹500, subject to fund house rules.

As the trend of financialisation of savings gains momentum, the mutual fund industry in India continues to grow rapidly.

Let's take a look at the mutual fund industry’s growth trajectory:

History of Mutual Funds in India

Let’s explore the history of mutual funds in India.

1963

The Unit Trust of India was established in 1963 through an Act of Parliament, at the initiative of the Government of India and the Reserve Bank of India. UTI remained the only mutual fund institution in India until public sector mutual funds began entering the market in 1987.

1987

In 1987, public sector entities ventured into the mutual fund space, and the State Bank of India (SBI) was the first entity other than the UTI to offer mutual fund schemes. Following the SBI’s foray, others like Canara Bank, Life Insurance Corporation of India, and Indian Bank also entered the mutual fund space over the years. Further, in 1992, the regulatory body SEBI was established to protect investors’ interests and regulate India’s securities market.

The entry of public sector mutual funds helped the industry grow, and total assets under management reached approximately ₹47,004 crore by the end of 1993.

1993

In 1993, private sector companies entered the mutual fund industry, giving investors more choices. By the end of January 2003, the industry had 33 mutual funds, with total assets under management of approximately ₹1.22 lakh crore.

2003

In February 2003, UTI was divided into two separate entities, marking an important change in the mutual fund industry. The industry also saw mergers and acquisitions during this broader period.

2009

In 2009, the mutual fund industry faced challenges due to the global financial crisis. SEBI also abolished entry loads on mutual fund investments, changing how distributors were compensated.

2014

From 2014 onwards, the mutual fund industry experienced strong long-term growth in assets under management, supported by investor participation and market movements. However, investment inflows varied over time.

2026

According to a press release issued by the Ministry of Finance, Indian households are moving from traditional physical real estate and gold investments to equity and mutual funds. AMFI reported an on-year increase of 23.11% in the mutual fund industry's assets under management (AUM), surging from ₹53.40 lakh crore in March’24 to ₹65.74 lakh crore in March’25.

Mutual Fund Industry Outlook in India

According to AMFI data, the average Assets Under Management of the Indian mutual fund industry in September 2026 stood at ₹87,09,182 crore. As of September 30, 2026, the total Assets Under Management of the Indian mutual fund industry stood at ₹82,64,117 crore.

Over five years, the industry’s AUM rose from ₹36.74 trillion in September 2021 to ₹82.64 trillion in September 2026, more than doubling during this period.

The industry first crossed the ₹10 trillion mark in May 2014. The mutual fund industry crossed the milestone of 10 crore folios in May 2021. Over the decade from September 2016 to September 2026, the industry's AUM grew nearly sixfold, from ₹15.80 trillion to ₹82.64 trillion.

As of September 30, 2026, the total number of mutual fund folios stood at 28.62 crore. Of these, approximately 21.82 crore belonged to equity, hybrid, and solution-oriented schemes, which have a significant share of retail investor participation.

FAQs

When did mutual funds start in India?

Mutual funds started in India in 1963 with the establishment of the Unit Trust of India (UTI).

When did private companies enter the mutual fund industry?

Private companies entered the Indian mutual fund industry in 1993, giving investors more options.

What does AUM mean in mutual funds?

In mutual funds, AUM stands for Assets Under Management. It is the total value of investments managed by a mutual fund industry or fund house.

How much was the AUM of India's mutual fund industry in September 2026?

The industry's total AUM of the India mutual fund industry stood at ₹82.64 lakh crore as of September 30, 2026.

What is a mutual fund folio?

A mutual fund folio is an account used to record an investor's mutual fund holdings with a fund house.