Mutual Funds Growth Story: India’s mutual fund industry has undergone massive transformation, especially with Asset Under Management (AUM) growing six-fold in the past decade reaching Rs 65.7 lakh crore inf FY25 from Rs 1.5 lakh crore in FY05.
Coming to average assets under management (AAUM), it increased by 21.3 per cent from Rs 55 lakh crore in FY24 to Rs 66.7 lakh crore in FY25. This increase in growth has been underpinned by rising investor participation, strong market performance, and structural reforms in the capital markets.
Notably, AUM saw declines in only four instances FY09, FY11, FY12, and FY20 each coinciding with significant macroeconomic disruptions such as the Global Financial Crisis (GFC), Twin Balance sheet Crisis and Covid-19.
On the retail front, Systematic Investment Plans (SIPs) contribution increased from Rs 43,921 crore in FY17 to nearly Rs 3 lakh crore in FY25 — a more than sixfold increase over eight years, translating to a robust Compound Annual Growth Rate (CAGR) of 26.6 per cent.
Notably, SIP flows crossed Rs 1 lakh crore mark in FY20, experienced a brief drawdown in FY21 amid pandemic-induced volatility, and have posted uninterrupted growth over the past four years. Remarkably, SIP contributions have doubled between FY23 and FY25, rising from Rs 1.4 lakh crore to nearly Rs 3 lakh crore.
This parallel growth is attributed to the increasing reliance on SIPs as one of the primary investment routes, driven by stronger market performance, greater scheme variety, and the convenience of digital onboarding.
Over the last decade, net inflows have exhibited sharp increase from over Rs 1 lakh crore in FY15 to an all-time high of Rs 8.2 lakh crore, nearly eight-fold increase in FY25. This substantial growth underscores the increasing depth and maturity of the Indian capital markets, as well as the evolving behaviour of investors. However, the trajectory has not been linear. The industry experienced notable setbacks in FY20 and FY22, registering net outflows of Rs 1.1 lakh crore and Rs 1.8 lakh crore, respectively.