Mutual fund AUM, unique PANs double in 5 years as more investors chase higher returns

The report noted a significant transformation in India's household savings landscape. As of March 2023, as much as 71.5 percent of household savings were allocated to physical assets, while 28.5 percent invested in financial assets. Among financial savings, bank deposits and currency holdings have declined, while mutual funds, life insurance, and PPF investments have gained traction.

Rise of the Retail Investor and SIP Culture

The investor participation has surged significantly with the number of unique Permanent Account Number (PAN) holders investing in mutual funds having more than doubled from 2.1 crore in March 2020 to 4.5 crore in March 2024.

The share of retail investors in total AUM increased from 19.8 percent in 2019 to 27.9 percent in 2024, indicating a growing preference for mutual funds among individual investors. Systematic Investment Plans (SIPs) have played a key role in this trend, offering an affordable and disciplined approach to investing, particularly in smaller cities and towns.

Mutual Fund Adoption Beyond Metros

A notable trend is the expansion of mutual fund investments beyond metropolitan areas. The AUM share of the top five cities fell from 61.8 percent in 2019 to 52.6 percent in 2024, while the share of smaller cities nearly doubled from 9.9 percent to 18.7 percent. This shift reflects growing investor participation in Tier II and III cities, driven by increased financial literacy and the proliferation of digital investment platforms.

Corporate vs Retail Investment Trends

While retail participation in mutual funds has grown, the corporate share of AUM fell from 38.6 percent in 2019 to 35.5 percent in 2024. Corporate investors continue to dominate the debt mutual fund segment, particularly in short-maturity categories like overnight funds, liquid funds, and money market funds, where they contribute over 80 percent of the AUM.