Mutual Funds: Retail Investors Push Growth in Assets Under Management

Retail investors, which included high net-worth individuals (HNIs), were in possession of mutual funds to the tune of Rs 23.27 lakh-crore as of March 2023. This was a rise of 11.80% on a year-on-year (YoY) basis since 2022, as per the Association of Mutual Funds of India (AMFI).

The assets under management (AUM) in the mutual fund industry rose more than five times in the past decade up to March 2023. The AUM, which was Rs 7.01 trillion in March 2013, surged to Rs 39.42 trillion as on March 31, 2023, as per the AMFI data.

Investments in equity-oriented schemes, which include equity and balanced funds, by individual investors surged by 13%, while debt-oriented schemes rose by 0.16%.

Similarly, liquid or money-market mutual funds witnessed a 30% spike. At the same time, exchange-traded funds (ETFs) and fund-of-funds (FoFs) notched a 21% hike while taking into account the similar timeframe, as per the AMFI data.

The rise in individual equity assets rode on strong backing from distributors. However, the growth in ETFs and FoFs was supported through direct investments.

Going by the numbers, the top 30 cities were responsible for 56% of the growth in individual investments pushed by MF distributors. Similarly, 18% growth was witnessed from direct individual investments.

As per AMFI, the city-wise growth is classified as follows: Top-30 (T30) and Beyond-30 (B30). Metros such as Delhi, Mumbai, Bengaluru, and Kolkata fell in the T-30 category. The B30 category included other cities across India. 

The B30 cities were the driver of 26% of individual investments. In this case, the distributor-driven investments formed 21% and directed investments notched 5% of the total. Thus, highlighting that 77% of the rise was pushed by distributors while 23% was attributed to direct investments. The data further proves that direct investments resulted in 22% of the total individual assets, which is 4% from B30 and 18% from T30.

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