Mutual Fund AUM grows 7x to ₹61.2 lakh cr in 10 years

The Indian mutual fund industry has witnessed over seven-fold growth in Assets under Management (AUM) in the last ten years, with equities taking majority of the share. The mutual fund industry’s AUM has grown to ₹61.2 lakh crore in June 2024, from ₹8.3 lakh crore in December 2013, as per ‘Where the money flows’ study by Motilal Oswal Asset Management Company (MOAMC).

The study reveals that passive funds AUM grew to ₹10.2 lakh crore with 17% of total market share, while AUM of active funds stood at ₹50.9 lakh crore, as of June 2024.

As per the study, equities have taken away the majority of the share with 59.75% of total AUM, followed by 26.95% in debt, 8.85% in hybrid, and 4.44% in others, indicating the dynamic shifts in the mutual fund landscape in recent times.

“The rise of AUM in India’s asset management industry reflects the country’s dynamic and rapidly evolving financial landscape. As more investors enter the market, the industry is poised for sustained growth,” says Prateek Agrawal, MD & CEO, MOAMC.

For asset managers, the challenge will be to innovate and adapt to the changing needs of investors, ensuring that they remain relevant in a competitive market. “They need to stay agile, informed, and ready to embrace the opportunities and challenges that lie ahead,” he adds.

During the June quarter of the financial year 2024-25, the MF industry registered net inflows of ₹3.25 lakh crore (₹1.66 lakh crore in debt, ₹1.43 lakh crore in equity, and INR ₹8 CR  in multi asset), spearheaded by almost equal split between debt and equity funds. The quarter saw the launch of 35 new schemes that collectively amassed over ₹27,000 crore, the study highlights.

“The financial markets are constantly evolving, and staying informed about where the money is flowing is essential for making sound investment choices,” says Pratik Oswal, Chief of Business Passive Funds, MOAMC.

In Q1 FY25, in the equity segment, broad based and arbitrage funds stole the spotlight, capturing over 73% of the net inflows in the equity category. At 73% of market share, arbitrage & broad based funds took away the lion’s share of net inflows in June quarter.

On the other hand, debt funds encountered significant net inflows of approximately ₹1.63 lakh crore in Q1FY25, which was the highest across all categories. This was primarily driven by liquid & money market funds which constituted over 85% of net inflows in this category, followed by overnight funds. Passively managed liquid and long duration funds saw significant net inflows, given their relatively small AUM, the report noted.

“Investors continued to prefer Passives for their Large Cap allocations with the category receiving greater than 95% of all net inflows in the passive segment,” the report read.

The April-June period also witnessed a continued resurgence of hybrid funds, led by multi-asset funds with net inflows of ₹8,500 crore, followed by equity savings (₹3,200 crore) and balanced advantage (₹2,600 crore) funds.

The study further reveals that investors are increasingly shielding away from international funds as they witnessed net outflows of ₹1,500 crore, predominantly driven by outflows from active funds. “During the quarter, outflows from the international category occurred across categories, primarily attributed to the RBI threshold, which led to few restrictions on new investments in such schemes.”