Recent Trends in Mutual Fund Industry

The Indian mutual fund industry has come a long way since its humble beginnings in 1961. The industry's assets under management (AUM) have witnessed more than fivefold increase in a span of 10 years - from Rs 8.90 trillion as of November 30, 2013, to Rs 49.05 trillion as of November 30, 2023.

Today, mutual funds have emerged as one of the most sought-after financial instruments by retail and institutional investors for achieving various financial goals. The industry has also witnessed several trends highlighting how it is geared for the future.

Recent Trends in the Mutual Fund Industry

1. Rise of Digitalization Making Mutual Fund Investments Seamless

The industry has witnessed a marked increase in digitalization, allowing investors to invest, track, and monitor their investments at the click of a button. Today, many fintech platforms have come up with apps that enable you to invest in a range of funds, track them in real time, and get a 360-degree view of your investments.

Not only investors but even distributors are collaborating with fintech startups to offer personalized services to investors leveraging their technologies. All in all, digitalization has helped expand the reach and ease of mutual fund investments significantly.

2. Increase in the Number of SIPs

Systematic investment plans (SIPs) have evolved as the go-to investment mode for investing in mutual funds. The SIP contribution in October 2023 stood at Rs 16,927.86 crores as against Rs 13,041 crores in October 2022. As per AMFI, the total number of SIPs currently stands at about 7.44 crores.

Offering ease of investments and imbibing a disciplined savings habit, SIPs help you stay invested across market cycles and offer the benefit of rupee cost averaging. It means you buy more units when markets are down and more when they are up. This ultimately averages out the investment cost and helps you easily navigate market volatility.

3. Surge in Investments from Smaller Cities

Another interesting trend that has come to the fore is the surge in mutual fund investments from smaller cities. Investors from cities like Pune, Kota, Durgapur, Alwar, etc., are growing quickly and giving tough competition to established ones like Mumbai, Chennai, and Kolkata. Efforts made by mutual fund distributors combined with eye-catching campaigns from AMFI have played a key role in attracting investors from smaller cities.

The initiatives have empowered investors from these regions to navigate the intricacies of mutual fund investments and make investments aligning with their goals. The shift in investor demographics indicates the growing financial literacy and awareness in smaller cities. Investors from these cities increasingly recognize mutual funds' potential as an effective vehicle for wealth creation and achieving long-term financial objectives.

Summing it Up

In recent years, the Indian mutual fund industry has become even more competitive, with new players coming to the fore. Several financial institutions have given regulatory approvals for setting up mutual fund businesses, which will likely present investors with greater choices. The industry is well-poised for growth in the coming days, with small distributors gaining traction and a surge in investments.