Mutual Fund AUM Sees Massive Growth in 16 Years: AMFI
The Indian mutual fund industry has witnessed an unprecedented growth in assets under management (AUM) over the past 16 years. According to a recent report by the Association of Mutual Funds in India (AMFI), the AUM of mutual funds has increased significantly from ₹5.89 lakh crore in May 2008 to ₹53.4 lakh crore in March 2024. This phenomenal growth is a testament to the increasing popularity of mutual funds among investors and the growing trust in the Indian capital markets.
The report highlights the significant rise in the share of mutual funds in household savings, from 7.6% in FY21 to 8.4% in FY23. This is a notable increase, indicating that more and more investors are turning to mutual funds as a viable option for their investments. The growth in AUM can be attributed to various factors, including the increasing awareness about the benefits of mutual funds, the rising number of investors, and the expansion of the mutual fund industry itself.
The Indian mutual fund industry has undergone significant changes over the years, with the introduction of new products, instruments, and regulations. The industry has also seen a surge in the number of players, with both domestic and foreign players entering the market. This increased competition has led to a wider range of options for investors, making it easier for them to choose the right mutual fund that suits their investment objectives and risk tolerance.
One of the primary reasons for the growth in mutual fund AUM is the increasing awareness about the benefits of investing in mutual funds. Mutual funds offer a range of benefits, including diversification, professional management, and liquidity. They also provide investors with an opportunity to invest in a diversified portfolio of securities, which can help to reduce risk and increase returns.
Another factor contributing to the growth in mutual fund AUM is the rise of digitalization. With the increasing use of technology, investors can now invest in mutual funds with ease, using online platforms and mobile applications. This has made it easier for investors to access mutual funds and has increased the accessibility of the market.
The growth in AUM has also been driven by the increasing popularity of systematic investment plans (SIPs). SIPs allow investors to invest a fixed amount of money at regular intervals, which helps to reduce the impact of market volatility and timing risks. SIPs have become increasingly popular among investors, especially among new investors, as they provide a disciplined approach to investing.
The report also highlights the growing importance of mutual funds in the Indian economy. Mutual funds play a crucial role in channeling savings from the household sector to the capital markets, which can help to fuel economic growth. The growth in mutual fund AUM is, therefore, a significant development for the Indian economy, as it indicates an increase in the flow of funds from the household sector to the capital markets.
The growth in mutual fund AUM has also been driven by the increasing popularity of equity-linked savings schemes (ELSS). ELSS is a type of mutual fund that offers tax benefits under Section 80C of the Income-tax Act. ELSS has become increasingly popular among investors, especially among those who are looking for a tax-efficient way to invest in the stock market.
In conclusion, the growth in mutual fund AUM is a significant development for the Indian mutual fund industry. The industry has seen a remarkable growth in AUM over the past 16 years, and the report highlights the increasing popularity of mutual funds among investors. The growth in AUM is driven by various factors, including the increasing awareness about the benefits of mutual funds, the rise of digitalization, and the growing importance of mutual funds in the Indian economy. As the Indian economy continues to grow, the mutual fund industry is likely to remain an important player in the capital markets, providing investors with a range of options to invest their savings.
