Mutual Fund Industry Gains 55 Lakh New Investors in First Half of FY 2025
The mutual fund (MF) industry in India has experienced remarkable growth, welcoming over 55.34 lakh new investors in the first six months of FY 2024-2025. This increase in investors has raised the total count from 4.46 crore as of April 1, 2024, to 5.01 crore by the end of September 2024, as per recent data.
In contrast, the industry has added new investors of 27 lakhs in the same FY 2023-24 and 17 lakhs in FY 2022-23, indicating a significant upward trend in investor participation.
Of this, a 5.01 crore investor base reported, 4.98 crore have unique PAN numbers, while another 3.5 lakhs are investors who are PAN-exempted.
This growth trend as seen by the heads of the industry is, therefore, reflective of high trust in mutual funds. This growth in the number of new investors is largely attributed to the more robust investor sentiment for mutual funds. This is partly due to a good track of steady returns and a perceived security measure through the transparent nature of the product.
Technological improvements that streamline investment solutions and education-based efforts have helped create greater awareness regarding investment among people, resulting in this growth. In addition, most of the new investments have come through SIPs, which attracted large numbers of client segments like millennials and women.
Focusing on less-saturated regions, industry bodies have increased awareness campaigns in under-penetrated areas, especially in cities beyond the top 30 (B30). Through on-ground activities, AMCs and AMFI have managed to extend their reach, educating new investors and gaining broader participation across regions. Industry professionals also acknowledge the impact of positive macroeconomic conditions and the equity market’s solid performance on investor interest.
Fintech platforms have also significantly contributed to this growth by attracting a substantial number of new investors. These digital platforms now account for nearly 50% of recent investor additions, a dramatic increase from just 10% five years ago.
Six months into the growth experienced in the MF industry over several developments:
- Industry-wise AUM rose by 24% from Rs.55 lakh crore as of March 30, 2024, to Rs.68 lakh crore as of September 30, 2024.
- 3.26 crore folios added as of April-September 2024. Over 99% of the folios are of individual investors.
- Individual investors account for 62% of the total AUM of the industry.
- Out of the Rs.43 lakh crore individual AUM as of September 2024, approximately Rs.33 lakh crore, or 77%, came from regular investment plans.
- The industry received Rs.1.34 lakh crore in gross SIP inflows during April-September 2024.
- More than 14,000 new individual mutual fund distributors (MFDs) entered the industry, while 23,200 existing individual MFDs renewed their ARN licenses, bringing the total number of individual MFDs to 1.68 lakh by September 2024.
This is an accomplishment though the net SIP inflows are less than 50% of gross SIP inflows since the net SIP inflow works out merely by subtracting the outgo through redemption and switches from the gross inflow without accounting for investment time.
Overall, the mutual fund industry performance in the first half of FY 2025 shows a significant growth in investor confidence and versatility of the industry to attract a whole spectrum of investors, thus consolidating its position as a significant player in India’s financial landscape.
