2024 Review: Sectoral funds dominate as mutual fund AUM grows 38%, folios reach 22.08 crore

The Indian mutual fund industry continued its growth trajectory in 2024, fueled by a steady rise in Indian equities that attracted retail investors, making mutual funds a preferred vehicle for wealth creation and long-term financial planning.

In 2024, the mutual fund industry’s Assets Under Management (AUM) surpassed the ₹68 lakh crore milestone for the first time, reaching ₹68.08 lakh crore in November—a 34% increase compared to ₹50.78 lakh crore in December 2023. For the year 2024, the total AUM is projected to exceed ₹69 lakh crore, with December’s anticipated inflows expected to add another ₹1 lakh crore.

The robust AUM expansion was primarily driven by steady inflows into equity schemes, which stood at ₹30.5 lakh crore in November, constituting 45% of the industry’s total assets. A decade ago, equity mutual fund AUM stood at just ₹1.9 lakh crore. Notably, in August 2023, equity AUM crossed the ₹30 lakh crore mark for the first time.

While inflows into equity schemes slowed last month due to sharp stock market volatility, November marked the 45th consecutive month of net inflows into equity-oriented funds, underscoring the growing popularity of mutual funds among investors.

Retail investors flock to sectoral & thematic funds

Among the 11 equity mutual fund categories, sectoral and thematic mutual funds continued to draw significant retail investor interest, with their AUM rising 79% in 2024 to reach ₹4.61 lakh crore. The AUM was ₹2.58 lakh crore in December 2023.

The small-cap mutual funds have also attracted significant interest from investors as their AUM has grown to ₹3.26 lakh crore as of November 2024, compared to ₹2.33 lakh crore at the end of 2023. Similarly, mid-cap mutual funds saw a surge in AUM from ₹2.81 lakh crore to ₹3.89 lakh crore during the same period, as per AMFI. 

The AUM of large-cap funds stood at 3.62 lakh crore in 2024. The other schemes, which include index funds, ETFs, and gold ETFs, have witnessed an increase in AUM of 28% in 2024, up from ₹8.83 lakh crore in January to ₹11.29 lakh crore in November.

Over the past decade, the AUM of the Indian mutual fund industry has grown more than sixfold. The industry first crossed the ₹10 lakh crore mark in May 2014, and within three years, it doubled to surpass ₹20 lakh crore in August 2017. By November 2020, the AUM had crossed ₹30 lakh crore, and as of November 30, 2024, it stood at ₹68.08 lakh crore.

Meanwhile, the total number of mutual fund accounts, or folios, reached 22.08 crore (220.8 million) as of November 30, 2024. Of these, approximately 17.55 crore (175.5 million) folios were under equity, hybrid, and solution-oriented schemes, where retail investors dominate, according to AMFI data.

SIP inflows jump 48% in 2024

Systematic Investment Plans (SIPs), a method that allows investors to invest small amounts regularly, have reached new milestones in 2024. The SIP AUM reached a record of ₹13.54 lakh crore for November.

The number of SIP accounts stood at the highest ever at 10,22,66,590 in November 2024 as compared to 10,12,34,212 in September 2024. Monthly SIP inflows have increased 48% from ₹17,073 crore in November 2023 to ₹25,320 crore in November 2024. The 12-month cumulative SIP inflows reached ₹2.59 lakh crore.

The number of new SIPs registered in November 2024 stood at 49,46,408, whereas in October, it was 63,69,919. SIP has been gaining popularity among Indian MF investors, as it helps in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.

Will steady inflows continue to support Indian stock market?

Every dip in the Indian stock market recently caused by foreign portfolio investor (FPI) outflows has been promptly bought by domestic institutional investors (DIIs).

Whenever global uncertainties and market volatility have led to sell-offs by FPIs, domestic investors have stepped in to stabilise and drive the markets higher. This consistent pattern of domestic buying has been bolstered by robust retail investment, ensuring that even amid global economic turbulence, the Indian stock market remains resilient.

Retail investors should focus on equity mutual funds: Experts

Rishabh Goel, MD of Tailwind Financial Services, stated that they remain optimistic about the Indian market’s potential. As the year-end approaches, the mutual fund industry’s resilience in navigating market challenges while maintaining investor trust highlights its critical role in India’s financial ecosystem, he said.

Goel further highlighted that the Indian economy is poised for robust long-term growth, and, despite short-term market fluctuations, the equity market is expected to deliver strong returns over the coming years. He suggested investors maintain their focus on equity mutual funds as a reliable avenue for long-term wealth creation.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.