The Indian mutual fund industry is expected to become Rs 100 lakh crore in valuation by 2030, according to a report by Axis Capital.
India’s mutual fund industry has doubled its AUM in just four years to reach a landmark Rs 50 lakh crore in December 2023. Prior to this, the industry took five years to double its AUM from Rs 12 lakh crore to Rs 25 lakh crore.
The closing in on Rs 100 lakh-crore mark underscores how the cumulative power of bite-sized systematic investment plans (SIPs) from households will lead to a doubling of AUM for India’s mutual fund industry, said the report.
The AUM has doubled faster with increased retail participation and digitisation. Digitisation is enabling this exponential growth in retail participation.
The report also stated that household savings were likely to grow 11% CAGR as India’s GDP reaches ~USD 7 trillion by 2030E. The share of equities in household assets has doubled in the past 10 years (to ~4.7%), outlining significant opportunities for AMCs.
The report assumes that the prevailing ~USD 200 million gross monthly SIP flow will grow over 3x by 2030E as Indians deploy more into financial savings. Approximately 4 million SIP accounts were created in December 2023. January 2024 saw around 4.6 million new demat accounts.
The penetration of mutual funds is limited in India compared to global peers. The current penetration is at ~15% in India vs a global average of ~74%. With ~42 million unique investors, mutual funds’ penetration in India covers less than 5% of the working-age population at very low ticket sizes. India’s average SIP ticket size is Rs 2,300 per month.
The top eight AMCs by AUM manage approximately 73% of industry AUM.
