MF industry AUM to double to Rs 100 lakh crore by 2030, bite-size SIPs to drive growth

The Indian mutual fund industry doubled its assets under management in four years to hit Rs 50 trillion by December 2023.

The Indian mutual fund (MF) industry doubled its assets under management (AUM) in four years to hit Rs 50 lakh crore in December. The number could double by 2030,  if an Axis Capital report is anything to go by.

The India Asset Management AUM on the double: Closing in on 100 trillion report, which was released on February 23, said the industry AUM is expected to double to Rs 100 lakh crore by 2030, which implies a compound annual growth rate (CAGR) of 14 percent.

The numbers will be driven by retail participation with a rise in savings, teh report said. Assuming a nominal GDP growth rate of 11 percent CAGR over 2023-30, the report expects household savings to grow at a similar pace until 2030.

Retail participation in MFs has gone up from 45 percent in FY16 to 60 percent, with digitisation clearly playing a key role in attracting investors.

Also see: MC30: The best mutual funds to invest in

Growth drivers

MF penetration in India is only 15 percent of the GDP – far below the global average of 74 percent – which indicates the huge scope for growth.

The report said with 42 million unique investors, MF covered less than 5 percent of the working-age population. And this, too, is at low ticket size – monthly systematic investment plans or SIPs average at Rs 2,300, offering plenty of room to grow.

Big players are expected to maintain their dominance, driven by their strong distribution franchise. At present, the top eight asset management companies manage 73 percent of the industry AUM.