India’s asset management industry has grown impressively over the past ten years, increasing more than six times. By December 2024, the total assets under management (AUM) reached Rs 66.93 lakh crore, a big jump from Rs 10.51 lakh crore a decade earlier, according to a study by Motilal Oswal Asset Management Company.
This study shows that passive funds, which follow the market, have AUM of Rs 10.85 lakh crore and hold a 16% market share. Meanwhile, active funds, which are managed by professionals, have AUM of Rs 56.08 lakh crore.
“India’s mutual fund industry has shown impressive growth. The AUM has hit Rs 67 lakh crore, driven by a growing economy and more people understanding finance,” said Prateek Agrawal, MD and CEO of Motilal Oswal Asset Management Company. “This growth shows the industry is adapting to meet different investor needs and is crucial for strengthening our financial system. Innovations and personalized solutions will help us keep growing and take advantage of future opportunities.”
The study also mentions the importance of understanding where money is flowing in financial markets to make smart investment choices. For the quarter ending in December 2024, the mutual fund industry saw net inflows of about Rs 199,000 crore. Equity and debt funds made up 67% and 19% of these inflows, respectively.
Active equity funds led with net inflows of about Rs 105,000 crore, followed by passive equity with Rs 29,000 crore. Active debt funds attracted around Rs 47,000 crore, while passive debt funds saw outflows of about Rs 9,000 crore.
Broad-based funds were the most popular, making up around 69% of the market share and capturing most of the equity inflows. The share of active broad-based funds increased from 57% to 70%, while passive ones dropped from 90% to 66%.
Investors showed a preference for flexi-cap and mid-cap funds, each receiving around Rs 15,000 crore in net inflows. Many also chose passive funds for their large-cap investments, which received 84% of net inflows, although there was a slight drop as some money shifted towards mid-cap and small-cap options.
Thematic mutual funds saw a decline in net inflows, dropping from around Rs 17,000 crore to Rs 14,000 crore. But the consumption and infrastructure themes gained attention, pulling in a total of Rs 4,500 crore.
Constant maturity funds attracted most of the inflows, totaling around Rs 37,000 crore, followed by corporate bond funds, which brought in about Rs 6,000 crore, and gilt funds, receiving around Rs 4,000 crore. However, target maturity funds faced outflows of about Rs 8,000 crore.
Liquid funds made up about 41% of net flows at Rs 15,000 crore, with low-duration and ultra-short duration funds taking in Rs 7,500 crore and Rs 7,000 crore, respectively. Investors often choose short-term debt funds to park their cash, leading to fluctuating money movements. The share of money market funds’ inflows decreased from 27% to 9%.
In the hybrid category, multi-asset funds led with 48% of the net inflows, while balanced advantage funds followed at 25%. Equity savings funds saw their share drop from 26% to 15%, while aggressive hybrid funds’ share increased from 4% to 12%.
International funds experienced little interest due to new investment limits from the RBI. Both active and passive broad-based funds saw net inflows of Rs 100 crore, whereas passively managed international funds showed outflows of Rs 30 crore.
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