The Indian mutual fund industry’s landscape continues to largely be controlled by a few key asset management companies, as indicated by the latest AMFI-Crisil Factbook. The report reveals that the top five companies manage approximately 56% of the sector’s assets, with the top ten handling nearly 78% of the total assets.
Highlighting the industry’s concentration, the report compares this trend with the United States, where the top five fund houses also manage 56% of assets, but the top ten firms account for 69%. This suggests that asset concentration in India is more pronounced than in the US.
Nevertheless, the Indian market is witnessing a positive shift. Since December 2019, there has been a gradual decline in asset concentration among the top AMCs, reflecting growing competition. This is in stark contrast to the US, where concentration has been on the rise over the same timeframe.
The increase in the number of AMCs in India, with several new players entering since March 2019, can be attributed to approvals from the Securities and Exchange Board of India (SEBI). The count of AMCs rose from 41 to 45 by December 2024, thanks to entries by major financial institutions, fintech, and international firms.
A notable advancement is the introduction of the ‘MF Lite’ regulations in December 2024, designed to lower entry barriers and encourage competition within the industry. These guidelines aim to diversify the market by allowing more AMCs to emerge, ultimately benefiting investors with a wider array of investment products.
As the industry opens up to new entrants, India’s mutual fund sector is expected to grow more diverse and competitive, providing investors with enhanced choices and checking the dominance of a few large companies.
(With inputs from agencies.)