How has India’s Mutual Fund Industry Grown 7 Times in a Decade?
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Synopsis
The Indian Mutual Fund industry has experienced a remarkable growth, with total AUM reaching Rs 74.40 lakh crore in just a decade. This article delves into the factors contributing to this growth, including the rise of passive investing and shifts in investor preferences, providing valuable insights for both seasoned and new investors.
Key Takeaways
- India’s Mutual Fund industry has seen a growth to Rs 74.40 lakh crore in AUM over the past decade.
- Equity funds make up 59.94% of the total AUM.
- Passive funds now account for about 17% of total AUM.
- Debt segment attracted the largest net inflows in the latest quarter.
- Investors are increasingly favoring cost-effective and transparent investment strategies.
Mumbai, Aug 4 (NationPress) The overall Assets Under Management (AUM) of India's Mutual Fund (MF) industry has reached Rs 74.40 lakh crore, representing an impressive more than sevenfold increase over the last decade, according to a report released on Monday.
Of this total AUM, equity holds the largest portion at 59.94 percent, followed by debt at 26.53 percent, hybrid funds at 8.28 percent, and other categories comprising 5.26 percent, as reported by Motilal Oswal Mutual Fund.
Notably, the report highlights a significant trend in the industry with the growth of passive investing, which now constitutes approximately 17 percent of the total AUM.
Although active funds still lead in absolute numbers, the rise of passive strategies indicates a broader acceptance of cost-effective, transparent, and benchmark-oriented approaches, the report emphasizes.
For the quarter ending June 2025, the total projected net inflows reached Rs 3.98 lakh crore.
This influx was primarily driven by the debt segment, which attracted Rs 2.39 lakh crore, reversing the outflows seen in the prior quarter. Equities contributed Rs 1.33 lakh crore, with commodities adding Rs 9,000 crore.
In this context, active strategies accounted for Rs 3.62 lakh crore of total inflows, while passive funds contributed Rs 36,000 crore, the report noted.
“This quarter signifies a noteworthy shift in portfolio allocation, showcasing a growing inclination towards well-diversified, robust portfolios, along with a gradual return to debt,” stated Pratik Oswal, Head - Passive Business at Motilal Oswal Asset Management Company Ltd. (MOAMC).
It is particularly encouraging to observe the rising interest in passive investing.
Indian investors are increasingly recognizing the structural advantages of passive funds—such as simplicity, cost efficiency, and alignment with market benchmarks, he added.
In the equity domain, broad-based funds emerged as the leading category, attracting Rs 86,000 crore in net inflows.
This category captured 64 percent of total equity flows—55 percent from active funds and an impressive 106 percent from passive, indicating a heightened allocation towards passive equity strategies, as highlighted in the report.
Among the active broad-based funds, Flexi Cap led with Rs 15,800 crore, trailed by Small Cap at Rs 12,000 crore and Mid Cap at Rs 10,800 crore.
In the realm of passive investments, Large Cap funds remained the most favored segment, reflecting an ongoing focus on blue-chip benchmarks.
Conversely, thematic mutual funds witnessed a net outflow of Rs 2,400 crore, contrasting with the Rs 8,400 crore inflows from the previous quarter.
Point of View
It is imperative to recognize the transformative growth of India's Mutual Fund industry. The increasing preference for passive investment options signals a significant shift in investor behavior, highlighting the demand for transparency and cost efficiency. As the industry evolves, it is crucial for stakeholders to remain informed and adapt to these changes to harness the potential of this thriving market.
NationPress
20/08/2025
Frequently Asked Questions
What are Assets Under Management (AUM)?
Assets Under Management (AUM) refer to the total market value of the assets that a financial institution manages on behalf of its clients.
What is passive investing?
Passive investing is an investment strategy that seeks to replicate the performance of a specific index or benchmark, often involving lower management fees than active investment strategies.
How has the AUM of Indian Mutual Funds changed over the years?
The AUM of the Indian Mutual Fund industry has grown more than sevenfold in the past decade, reaching Rs 74.40 lakh crore.
What trends are being observed in the Indian Mutual Fund market?
There is a notable trend towards passive investing, which currently accounts for approximately 17% of the total AUM.
What are the main categories of mutual funds?
The main categories of mutual funds include equity, debt, hybrid, and other specialty categories, with equity being the most dominant.
