Mutual Funds: A Preferred Investment Choice Among Young Investors

The inclination towards choosing mutual funds as an investment tool, especially among youngsters, underscores a tectonic shift in the mindset of people related to their preference for financial planning. 

If the data shared by the Association of Mutual Funds in India (AMFI) is anything to go by, then the Assets Under Management (AUM) of the Indian mutual fund industry have attained unprecedented levels.

As of September 30, 2023, the AUM surged to Rs 46.58 lakh crore. The growth trajectory of the mutual fund industry continues to exhibit promise. 

About 10 years ago, in 2013, the AUM stood at Rs 7.46 lakh crore, but it has since surged to Rs 46.58 lakh crore in 2023. This highlights a more than six-fold jump within a span of 10 years.

In the five years from 2018 to 2023, the AUM almost doubled, rising from Rs 22.04 lakh crore to Rs 46.58 lakh crore. This suitably highlights the rising popularity of mutual funds among investors of all age groups.  

The mutual fund industry touched the milestone of Rs 10 lakh crore in May 2014, and in the next three years, it doubled, breaching the Rs 20 lakh crore mark in August 2017. Up to November 2020, the AUM had exceeded the Rs 30 lakh crore mark. 

At the same time, the number of folios, or accounts, in the mutual fund industry has witnessed a significant rise. In May 2021, the industry registered 10 crore folios, and as of September 30, 2023, it stood at 15.71 crore. Of these, about 12.55 crore belong to equity, hybrid, and solution-oriented schemes, with the large pie of investments coming from the segment of retail investors.

Also,  the Systematic Investment Plan (SIP) remains a preferred mode of investment in mutual funds. In September 2023, SIP inflows surged to an all-time high of Rs 16,042 crore, marking a significant jump from the previous month’s Rs 15,814 crore. 

This rise is related to various factors, including a record 7.12 crore SIP accounts in September 2023, as compared to 6.9 crore in August 2023.

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