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MUTUAL FUNDS INDUSTRY IN INDIA

Mutual Funds Industry in India: Growth, Trends, and Opportunities

The mutual fund industry in India has emerged as a significant player in the financial services sector, facilitating investment for millions of retail and institutional investors. With a diverse range of schemes catering to various investment goals and risk appetites, mutual funds have transformed the investment landscape in India, promoting financial inclusion and literacy.

Key Highlights of the Industry

  • Total AUM: USD 804 Billion as of August 31, 2024
  • Decadal Growth: From USD 122 Billion (2014) to USD 804 Billion (2024) - a sixfold increase
  • Five-Year Growth: From USD 307 Billion (2019) to USD 804 Billion (2024)
  • Folios Milestone: Crossed 100 Million folios in May 2021; stood at 204.5 Million by August 2024
  • Retail Investor Participation: Retail investors account for 48-50% of the total AUM
  • SIP Accounts: 96.1 Million SIP accounts as of August 2024
  • SIP Contribution Growth: SIP contributions doubled between 2021 and 2024
  • Monthly SIP Inflows: USD 2.83 Billion as of August 2024

Types of Mutual Funds in India

  • Equity Mutual Funds: Primarily invest in stocks for long-term capital appreciation.
  • Debt Mutual Funds: Focus on fixed-income securities like bonds and debentures for stable returns.
  • Hybrid Mutual Funds: Combine investments in both equity and debt to balance risk and return.
  • Index Funds: Replicate the performance of a specific market index using a passive strategy.
  • Exchange-Traded Funds (ETFs): Traded like shares on stock exchanges, usually tracking an index with high liquidity.

Industry Outlook

The mutual fund industry in India is expected to continue its robust growth, driven by rising retail participation, growing financial literacy, digital adoption, and favorable regulatory frameworks. With increasing preference for SIPs, diversification of schemes, and the push towards long-term wealth creation, mutual funds will remain a cornerstone of India's investment ecosystem.

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