Mutual Fund Industry Witnesses Robust Growth with SIP Flows Rising
Mumbai: The mutual fund (MF) industry in India has achieved significant milestones, with systematic investment plan (SIP) flows marking a 39% increase in November 2024 compared to the same period last year. According to a report by Motilal Oswal, monthly SIP contributions reached Rs 25,320 crore, highlighting the growing popularity of this disciplined investment method among retail investors.
In parallel, the total assets under management (AUM) for mutual funds surpassed an impressive Rs 68 lakh crore, recording a 48% year-on-year growth. This reflects the industry’s ability to attract and retain investors despite global uncertainties and market fluctuations.
SIP Versus Non-SIP Flows
The report highlights that SIP contributions have outpaced non-SIP gross flows, growing by 48% year-on-year, while non-SIP flows expanded by only 12%. SIPs now account for approximately 2% of total mutual fund inflows, indicating a structural shift towards long-term, systematic investments.
Equity AUM: A Major Growth Driver
Equity mutual funds continue to dominate the mutual fund landscape, contributing over 45% to the total AUM. Over the past year, equity AUM has grown by 50%, adding Rs 10 lakh crore to reach Rs 30 lakh crore. This growth has been consistent, with an average monthly increase of 3% in equity AUM.
Additionally, equity mutual fund redemptions have decreased, accounting for approximately 42% of monthly flows, signaling sustained investor confidence. The number of investor folios across all equity categories also saw an uptick, with mid-cap funds experiencing the highest rise of 6,06,430 new folios in November 2024.
CAGR and Long-Term Resilience
Since March 2021, the total AUM for the mutual fund industry has grown at a compound annual growth rate (CAGR) of 23%, demonstrating resilience and consistent performance. This growth is indicative of a paradigm shift in Indian investment behavior, with more individuals adopting disciplined and systematic approaches to wealth creation.
Key Trends and Insights
- Retail Participation Growth:
The increase in SIP flows underscores a growing preference for systematic and steady wealth-building methods. - Shift in Investment Preferences:
Investors are increasingly drawn to equity funds, as evidenced by the rise in folios across all equity categories and declining redemption rates. - Mid-Cap Funds in Demand:
The surge in mid-cap folios reflects robust demand for funds targeting medium-sized companies with growth potential.
The mutual fund industry in India continues to thrive, driven by disciplined SIP contributions, robust equity fund performance, and an expanding investor base. As the total AUM crosses the Rs 68 lakh crore mark, the sector demonstrates resilience and adaptability, aligning with the evolving investment preferences of Indians. With SIPs forming a cornerstone of this growth, the future looks promising for sustained investor participation and wealth creation.
