Robust growth beckons Indian mutual fund industry in landmark year

The mutual fund industry in India is on a high, driven majorly by individual investors. If one considers equity, hybrid and solution-oriented schemes, individual investors have played a pivotal role in driving the growth trajectory. Equity, hybrid, and solution-oriented schemes, collectively accounted for nearly 58 per cent of industry assets and 80 per cent of folio count by March 2024. This certainly drives home the point that there has been an increasing participation of households in the capital markets through mutual funds. Looking at the overall scenario, fiscal year 2024 has emerged as a landmark period for the domestic mutual funds industry, witnessing a remarkable surge in assets under management (AUM) by nearly Rs. 14 lakh crore, reaching a record high of Rs. 53.40 lakh crore as of March 2024, compared to Rs. 39.42 lakh crore in March 2023. The mutual fund industry, as a whole experienced an impressive growth rate of over 35 per cent, the highest since fiscal 2021. This surge was complemented by a significant increase in the number of investors, with number of folios reaching a record high of 17.78 crore, translating to an investor base of around 4.46 crore.

What has been a major revelation is that there has been a significant, and steady, rise of women. This time around, women constituted nearly 23 per cent of investors, as of February 2024, going by the AMFI Mutual Fund Industry Fiscal year 2024 report. Equity-oriented categories witnessed a substantial growth of 55 per cent during the fiscal 2024, reaching Rs. 23.50 lakh crore in assets, propelled by robust inflows and mark-to-market gains. The Flexi cap category emerged as the largest fund category, followed closely by large cap funds, with multi cap funds experiencing the highest growth rate of 85 per cent. Hybrid funds also made significant strides, crossing the Rs seven-lakh crore milestone, with asset gains exceeding 50 per cent. This growth was driven by investors adopting an asset allocation approach and leveraging arbitrage opportunities in the market. Dynamic asset allocation / balanced advantage funds emerged as the largest category within the hybrid funds segment. Passive funds, on their part, continued to benefit from institutional investment flows, particularly into exchange-traded funds (ETFs) from investors such as provident funds. ETFs as a category have assets of Rs. 6.64 lakh crore as of March 2024.

However, debt funds saw moderate growth of around seven per cent during the fiscal year, while reaching Rs. 12.62 lakh crore in assets, after experiencing contractions in the previous two fiscal years. When it comes to investor adoption of systematic investment plans (SIPs) that also kept on rising, with monthly net inflows touching approximately Rs. 19,300 crore in March 2024. For the fiscal year 2024, net inflows through SIPs stood at nearly Rs. two lakh crore, demonstrating increasing investor confidence and commitment to disciplined investing. Equity markets have more or less been buoyant, while new investment strategies are evolving and participation of individual investors has been growing, correspondingly. As long as this scenario continues, the mutual fund industry is bound to enjoy robust growth. There is no doubt about that.