Mutual Funds: The Need for Expansion and Ambition in India
While the mutual fund industry in India has seen significant growth in assets under management, the number of unique investors remains relatively low. This article explores the need for mutual funds to focus on broader outreach to tap into the vast potential of the Indian market.
Mutual FundsAumInvestor BaseExpansionFinancial EducationReal EstateDec 21, 2025
However, AUM growth does not give the whole picture. The number of unique investors in the mutual fund industry is less than six crore. It has grown by 10-11% year over year, but this is still below potential for a fast-growing economy like India, where the population is nearing 150 crore. This means that barely 4% of the country’s population is involved in mutual funds. To add to that, 80% of investors are concentrated in the top 30 cities. In fact, Maharashtra alone accounts for 30-40% of the investors.
Mutual funds are a vehicle for ordinary people to organize their personal finances. They offer exposure to asset classes such as equities, debt, commodities, and real estate or infrastructure. There is a high-decibel campaign run by the Association of Mutual Funds in India (AMFI), an industry body. Individual companies also run their own awareness campaigns and investor education programs. Some large mutual fund asset management companies, such as HDFC Asset Management, Nippon Life India, and Aditya Birla Sun Life Asset Management, are also listed on stock exchanges. Last week, ICICI Prudential Asset Management, the largest by unique investors, listed at a premium to the IPO price. Investors are betting that mutual fund companies will continue to grow rapidly.
However, the growth could face risks under an asset-under-management-oriented approach. At some stage, the mutual fund industry must put its heads together and focus on the way forward to expand its reach. This involves not just increasing the AUM but also broadening the investor base. The industry needs to focus on reaching out to the vast untapped population in smaller towns and rural areas. This can be achieved through increased awareness campaigns, educational programs, and the development of more accessible and user-friendly investment options.
Moreover, the industry should explore innovative ways to engage with potential investors. Digital platforms and mobile apps can play a crucial role in this expansion. By leveraging technology, mutual fund companies can provide easier access to investment products and simplify the investment process. This will not only attract new investors but also help existing investors manage their portfolios more effectively.
In conclusion, while the mutual fund industry in India has made significant progress, there is a long way to go. The focus should shift from just increasing AUM to expanding the investor base and making mutual funds more accessible to the broader population. Only then can the true potential of the mutual fund industry in India be realized.
Frequently Asked Questions
What is the current AUM of the mutual fund industry in India?
The current AUM of the mutual fund industry in India is Rs 80 lakh crore.
How many unique investors are there in the mutual fund industry in India?
There are less than six crore unique investors in the mutual fund industry in India.
What percentage of India's population is involved in mutual funds?
Only about 4% of India's population is involved in mutual funds.
What are some asset classes that mutual funds offer exposure to?
Mutual funds offer exposure to asset classes such as equities, debt, commodities, and real estate or infrastructure.
What are some ways the mutual fund industry can expand its reach in India?
The mutual fund industry can expand its reach by focusing on awareness campaigns, educational programs, and leveraging digital platforms to make investments more accessible.
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