Mutual Fund Industry Recap 2024

Indian mutual fund industry achieved new heights in 2024 as it surpassed Rs 68 lakh crore in assets under Management (AUM). It is not only the AUM, but another aspect of the industry also grew this year. Let us look at the details.

Growth in AUM

The mutual fund industry AUM crossed Rs 68 lakh crore in 2024 (in November 2024). In December 2023, the AUM was Rs 50.78 lakh crore, which means the AUM has grown by 34% in this period. By the end of December 2024, the AUM is projected to cross Rs 69 lakh crore easily.

The maximum growth came in the equity mutual funds - the equity mutual fund AUM stood at Rs 30.5 lakh crore - 45% of the total AUM.

To give you some idea of how fast the growth was - a decade ago - the Indian equity mutual fund AUM was a mere Rs 1.9 lakh crore. In August 2023, the AUM crossed Rs 30 lakh crore for the first time. This means that the AUM has more than doubled in less than 18 months.

The Growth of Sectoral and Thematic Funds

In India, you will find 11 equity mutual fund categories. In 2024, sectoral and thematic funds had the maximum interest from investors. In December 2023, the AUM of these funds was Rs 2.58 lakh crore, and they increased 79% in 2024 and reached Rs 4.61 lakh crore.

Small-cap mutual funds have witnessed remarkable growth in 2024, with their Assets Under Management (AUM) rising to Rs 3.26 lakh crore by November, up from Rs 2.33 lakh crore at the end of 2023. Similarly, mid-cap mutual funds experienced a significant surge, with AUM increasing from Rs 2.81 lakh crore to Rs 3.89 lakh crore during the same period, according to AMFI data.

Large-cap funds reported an AUM of Rs 3.62 lakh crore in 2024. Additionally, other schemes, including index funds, ETFs, and gold ETFs, saw a robust 28% growth in AUM, climbing from Rs 8.83 lakh crore in January to Rs 11.29 lakh crore by November. This surge highlights the growing investor interest across diverse fund categories in the Indian mutual fund space.

SIP Inflow in 2024

Systematic Investment Plans (SIPs) have achieved remarkable milestones in 2024, reflecting their growing popularity among mutual fund investors. The SIP Assets Under Management (AUM) reached an all-time high of Rs 13.54 lakh crore in November 2024, underscoring the robust growth of this disciplined investment approach.

The SIP accounts also hit a record high, at 10.23 crore in November 2024, up from 10.12 crore in September 2024. This increase highlights the expanding investor base, driven by greater awareness about the benefits of long-term and systematic investing.

Monthly SIP inflows witnessed an impressive 48% growth year-over-year, surging from Rs 17,073 crore in November 2023 to Rs 25,320 crore in November 2024. Over the past 12 months, cumulative SIP inflows reached an unprecedented Rs 2.59 lakh crore, demonstrating sustained investor confidence in mutual funds as a wealth-building tool.

In November 2024 alone, 49.46 lakh new SIPs were registered, following 63.69 lakh registrations in October. While the month-on-month decline may indicate some seasonal trends, the overall trajectory remains strong, signaling continued faith in the mechanism.

SIPs have become a cornerstone of wealth creation for Indian investors, particularly retail participants, due to their ability to mitigate market volatility through rupee cost averaging. By enabling disciplined and automated investing, SIPs eliminate the need to time the market, making them an ideal choice for novice and seasoned investors.

The record-breaking figures of 2024 underline the pivotal role SIPs play in shaping India’s mutual fund landscape, with more investors leveraging this strategy to achieve their financial goals systematically and consistently. With growing awareness, digital accessibility, and robust economic fundamentals, SIPs are expected to remain a key driver of mutual fund investments in the years to come.

Passive Funds Growth Story

In 2024, index funds and exchange-traded funds (ETFs) experienced excellent growth, driven by increasing retail adoption and a surge in thematic and sectoral investing. Investment accounts (folios) in index funds will double this year, while folios in ETFs have already risen by 37%, with December data yet to be finalized. The AUM in the passive investment segment grew by 23%, reaching approximately Rs 11 lakh crore during the first 11 months of the year.

The growth was driven by rising awareness of passive investing and an unprecedented 116 passive fund launches by November, many of which were industry-firsts. These included funds tracking niche indices such as capital markets, tourism, real estate, electric vehicles, and new-age automotive sectors.

Additionally, factor-based indices gained popularity in the passive space, with offerings such as Nifty MidSmallcap400 Momentum Quality 100, Nifty200 Alpha 30, Nifty500 Multicap Momentum Quality 50, and Nifty MidSmall Healthcare attracting significant investor interest. Sectoral and thematic funds, both active and passive, also saw strong demand, with active funds in this category securing the highest inflows and adding the most folios in 2024.

Worst Performing Mutual Funds

Till now we have seen the positive side, let us look at some numbers related to worst-performing mutual funds as well.

Out of 425 equity schemes, 34 funds have offered negative returns to investors on SIP investments in the current calendar year.

Three equity funds delivered double-digit negative returns on SIP investments made on January 1, 2024. The Quant PSU Fund reported a negative XIRR of 20.28% on these SIP investments. It means that if you made a SIP investment of Rs 10,000 in this fund, the current value of your investment would be Rs 90,763.

Outlook for 2025

The Indian mutual fund industry is on track for sustained growth in 2025. While global uncertainties and domestic market volatility may pose challenges, the industry is expected to benefit from India’s strong economic fundamentals, government-backed initiatives, and rising investor interest.

Large and mid-cap funds are likely to attract more attention amid market uncertainty, while small-cap funds may continue to gain traction due to their higher growth potential. Passive funds, including ETFs and index funds, are also expected to see increased adoption as investors seek cost-efficient investment options.

The continued popularity of SIPs and rising awareness in Tier 2 and Tier 3 cities will play a crucial role in driving retail participation. With a focus on innovation, investor education, and accessibility, the mutual fund industry is well-positioned to maintain its upward trajectory and further solidify its role as a key pillar of India’s financial ecosystem.