Mutual fund industry assets increase for 12th consecutive year, surge ₹17 lakh crore in 2024

The mutual fund (MF) industry in India posted stellar growth in 2024, surging ₹17 lakh crore in assets fueled by growing trading activity in the equity markets, optimistic economic growth and increasing investor participation. Experts suggest that this trend will continue in 2025 as well.

"The mutual fund industry's assets are expected to continue growing at a healthy pace in 2025. With rising penetration among retail investors, flows into equity funds, particularly through Systematic Investment Plans (SIPs), are likely to remain robust,” Kaustubh Belapurkar, Director-Manager Research at Morningstar Investment Research India, told PTI.

The upward trend in the MF was seen in 2024 with a significant net inflow of ₹9.14 lakh crore, along with a 5.6 crore increase in investor count. The SIPs grew popular as well, contributing ₹2.4 lakh crore in 2024, according to data from the Association of Mutual Fund Industry (AMFI).

The inflows aided the increase in the MF industry's assets under management (AUM), reaching an all-time high of ₹68 lakh crore by the end of November. The surge marked a 33% growth compared to the ₹50.78 lakh crore posted at the end of 2023.

The growth in 2024 is substantially higher than the 27% (₹11 lakh crore) increase in AUM noted in 2023. The growth was modest in the previous years as well, as a 7% (₹2.65 lakh crore) and a 22% (₹7 lakh crore) growth was reported in 2022 and 2021, respectively. Over the last four years, the industry has added an impressive ₹30 lakh crore to its AUM. The asset base stood at around ₹40 lakh crore at the end of December 2022, ₹37.72 lakh crore at the end of December 2021 and ₹31 lakh crore in December 2020, as per the data.

The MF industry’s AUM increased to an all-time high by November-end this year.

The industry AUM rose for the 12th consecutive year in 2024. The growth was supported by inflows in equity schemes, especially Systematic Investment Plans (SIPs). Monthly SIP inflows consistently surpassed the ₹25,000-crore mark in October and November, signalling their increasing appeal.

"The growing trend of financialisation has led to a significant growth in participation in equity markets and mutual funds, as reflected in the significant growth of AUM in the mutual fund industry," said Ganesh Mohan, CEO of Bajaj Finserv AMC told PTI.

"This shift is supported by the Indian economy's expansion and increasing financial awareness among retail investors, who are seeking higher returns at lower costs and with greater convenience," he added.

In 2024, the inflows included an investment of ₹3.53 lakh crore in equity-oriented schemes, ₹1.44 lakh crore in hybrid schemes and nearly ₹2.88 lakh crore in debt schemes.

Equity schemes were the most attractive factor for investors in the MF space this year. The schemes have been seeing a significant net inflow on a monthly basis since March 2021. The equity markets in India were important players, with the Nifty 50 and BSE Sensex indices rising 8.5% and 8%, respectively, in 2024.

"Investment through SIP into equity funds has become the default nature of investing for predominant Indian investors on the back of a structural shift in savings pattern, and equity markets continuing on the decadal growth trajectory is an established trend in India," Akhil Chaturvedi, ED & CBO, Motilal Oswal AMC, said to PTI.

Sectoral and thematic funds

The AUM of sectoral and thematic funds stood at ₹4.61 lakh crore in 2024, growing 79% from ₹2.58 lakh crore in December 2023. These funds were supported by robust retail interest with an inflow of ₹1.4 lakh crore including ₹67,000 crore raised through 40 new fund offerings (NFOs), Morningstar's Belapurkar said to PTI.

In the debt segment, liquid, ultra-short, and low-duration fund categories noted significant inflows, driven mainly by institutional investors seeking short-term liquidity. Furthermore, retail investors showed a growing interest in gilt and dynamic duration funds as well.

Gold inflows

Gold investments also saw growing action with inflows of ₹9,500 crore. Investors turned to gold looking for safety amid economic uncertainties, geopolitical tensions and changes in taxation rules. Experts noted that gold’s appeal as a hedge against volatility has been further boosted by its integration into multi-asset allocation funds.

Starting April 2025, Gold ETFs will be taxed as per the investor's tax slab for a holding period of less than 1 year and at 12.5% for a holding period of more than 1 year, bringing them on par with taxation for equity, Vishal Jain, CEO, Zerodha Fund House, said to PTI.

Measures taken by SEBI

The favourable regulatory environment added to the industry’s growth. The Securities and Exchange Board of India (SEBI) has introduced several measures to boost mutual fund penetration and oversight in the country. The MF Lite framework introduced by the SEBI simplifies setting up asset management companies, encouraging new players in passive funds. Moreover, the newly launched 'Specified Investment Funds' asset class enables boutique products to reach more investors with a reduced minimum ticket size of ₹10 lakh, as compared to ₹50 lakh for Portfolio Management Services (PMS) and ₹1 crore for Alternative Investment Funds (AIFs).