The Indian mutual fund (MF) industry is going through the best phase ever as retail investors have reposed their confidence in MF more than traditional investment products. Thanks to favourable market conditions and awareness. The MF industry’s Assets Under Management (AUM) reached an all-time high of Rs 46.63 trillion in August 2023, according to monthly data released by the industry body, the Association of Mutual Funds in India (AMFI). Now, the industry is eying for the Rs 100 trillion mark in the coming years. “The industry continues to work towards achieving Rs 100 trillion in AUM over the next few years, and we are almost halfway there already,” says NS Venkatesh, chief executive officer of AMFI.
The driving force behind this target is the burgeoning participation of retail investors, currently at an all-time high, indicating a resounding preference for MF over traditional investment avenues. In August 2023, the retail AUM for MF schemes, including equity, hybrid, and solution-oriented plans, amounted to Rs 24.63,047 trillion, with the average AUM reaching an unprecedented Rs 24.39 trillion, a little more than half of the total industry AUM. Typically, retail AUM is considered a “sticky” business as investors remain invested for the long term.
The Systematic Investment Plan (SIP) has emerged as the preferred choice for retail investors seeking wealth creation, considering the rising number of SIPs on a month-on-month basis. The SIP contributions reached an all-time high, soaring to Rs 15,813.54 crores in August 2023. SIP accounts have reached their highest-ever count at 6,96,85,946, up from 6,80,52,826 in July 2023. The SIP AUM also saw an uptick, totalling Rs 8,47,130.87 crores in August 2023, compared to Rs 8,32,274.61 crores in July 2023. These numbers underscored the popularity of SIPs among retail investors.
Venkatesh believes that Indian retail investors continued to show confidence in the equity markets through mutual funds, especially via SIPs. “It is heartening to see that Indian retail investors continue to invest in the equity markets via the Mutual Fund route, especially through SIP mode. The record SIP contribution of Rs 15,813.54 crores is a testimony of the Indian investors' long-term approach to building wealth by investing through small ticket-sized SIPs,” says Venkatesh.
Venkatesh also believes that the successful hosting of the G20 summit will create positive sentiments for India, which bode well for the Indian market. “Economic growth is expected to improve, and the markets are expected to grow. India successfully hosted the G20 summit this year, which has generated positive sentiments for the country and its economy on the global platform. Thus, the overall outlook for the mutual fund industry in India continues to be positive,” he said while presenting the monthly MF data at a press conference.
He further noted that the mutual fund industry in India had set its sights on achieving Rs 100 trillion in AUM in the coming years, and it was already making substantial progress toward that ambitious goal. It is to be seen how soon the MF industry will reach the Rs 100 trillion mark.
