New Delhi: The mutual fund landscape in India is poised for exponential growth, with assets under management (AUM) surging to a record Rs 50 lakh crore as of December 2023. Projections from Axis Capital suggest that this figure is set to double, reaching an impressive Rs 100 lakh crore mark by the end of 2030. The insights were unveiled in the report titled 'The India Asset Management AUM on Double,' released by Axis Capital today.
According to the report, the mutual fund industry's AUM is anticipated to witness a robust annual compound growth rate of 14 percent, propelling it to the coveted Rs 100 lakh crore milestone within the next seven years. This surge reflects a significant leap from Rs 25 lakh crore in just four years, underscoring the sector's rapid expansion fueled by increased participation from retail investors.
Despite the remarkable progress, India's mutual fund industry still represents a modest 15 percent share of the country's GDP, contrasting sharply with the world average of 74 percent. With only 4.2 crore investors constituting a mere five percent of the working-age population, there remains ample room for growth, particularly in light of the relatively modest average investment, currently pegged at Rs. 2300 through Systematic Investment Plans (SIP).
The report identifies the sustained dominance of large mutual fund companies as a key trend, with eight major players currently managing approximately 73 percent of the industry's assets. Leveraging their robust franchise networks, these industry giants are poised to maintain their stronghold amidst the evolving landscape.
One of the driving forces behind the industry's growth trajectory has been the increasing adoption of SIPs, which have witnessed a surge in monthly investments, soaring to Rs 18,800 crores. Annually, an impressive sum of Rs 2.25 lakh crores is now being channeled through SIPs, reflecting a growing preference among investors for disciplined and systematic investment strategies.
Furthermore, the report underscores the pivotal role of digitization in democratizing access to mutual fund investments, facilitating greater participation from a diverse array of investors.
As the mutual fund sector continues to evolve, driven by factors such as SIP proliferation and digital innovation, stakeholders are poised to capitalize on the burgeoning opportunities, propelling India's asset management industry to unprecedented heights.