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The Indian mutual fund industry experienced phenomenal growth in 2024, registering a remarkable ₹17 lakh crore increase in assets under management (AUM). This surge builds upon the strong performance witnessed in 2023 and is attributed to a confluence of factors, including buoyant equity markets, robust economic growth, and a significant rise in investor participation. Experts foresee this positive trajectory extending into 2025, projecting continued healthy growth in AUM. This substantial increase reflects a growing confidence in the Indian economy and a shift towards long-term investment strategies among retail investors.
A key driver of this growth is the increasing popularity of Systematic Investment Plans (SIPs), a disciplined approach to investing that allows individuals to invest regularly in small amounts. SIPs contributed a significant ₹2.4 lakh crore to the overall inflow in 2024. The year also witnessed a substantial net inflow of ₹9.14 lakh crore, accompanied by a 5.6 crore increase in the number of investors. This influx of capital propelled the industry's AUM to an all-time high of ₹68 lakh crore by November-end, representing a 33 per cent growth compared to the ₹50.78 lakh crore recorded at the end of 2023. This growth significantly surpasses the 27 per cent rise observed in 2023 and the more modest increases in previous years, highlighting the exceptional performance of 2024.
The robust performance of equity markets played a crucial role in fueling this growth. The Nifty 50 and BSE Sensex indices registered impressive gains of 8.5 per cent and 8 per cent, respectively, during 2024. This positive market sentiment encouraged investors to allocate more capital to equity-oriented schemes, leading to a net inflow of ₹3.53 lakh crore into these schemes. The consistent monthly SIP contributions, exceeding ₹25,000 crore in October and November, underscore the growing appeal of this investment strategy. This sustained interest, coupled with a structural shift towards long-term, disciplined investing, has propelled the remarkable growth witnessed in 2024. The increasing financialization of the Indian economy, coupled with rising financial awareness among retail investors seeking higher returns with greater convenience, has further contributed to this positive trend.
The growth in 2024 wasn't confined to equity schemes alone. Hybrid schemes attracted ₹1.44 lakh crore, while debt schemes saw inflows of around ₹2.88 lakh crore. Within the debt segment, liquid, ultra-short, and low-duration funds witnessed robust inflows, primarily driven by institutional investors seeking short-term liquidity. Retail investors, anticipating potential rate cuts in early 2025, showed renewed interest in gilt and dynamic duration funds. The gold investment segment also experienced a surge, with inflows of ₹9,500 crore. This can be attributed to investors seeking safe haven assets amid economic uncertainties, geopolitical tensions, and changes in taxation norms. The integration of gold into multi-asset allocation funds further enhanced its appeal as a portfolio hedge. The upcoming tax changes for Gold ETFs, aligning their taxation with equity investments, are expected to further boost their attractiveness.
Sectoral and thematic funds also emerged as major attractions, showcasing a remarkable 79 per cent growth in AUM, reaching ₹4.61 lakh crore in 2024 from ₹2.58 lakh crore in December 2023. This surge was fueled by heightened retail interest and significant inflows, including ₹67,000 crore raised through 40 new fund offerings (NFOs). The regulatory environment also played a significant role in supporting the industry's growth, providing a stable and conducive framework for investment. The consistent upward trajectory of the mutual fund industry over the last four years, with a collective addition of ₹30 lakh crore to its AUM, showcases its resilience and enduring appeal as a preferred investment avenue for a growing number of Indian investors. The outlook for 2025 remains positive, with experts predicting continued growth driven by sustained investor confidence, favorable economic conditions, and the increasing popularity of disciplined investment strategies like SIPs.
Source: Mutual fund industry on a high; asset surges ₹17 lakh cr in 2024