Summary of this article
Mutual Fund AUM expanding rapidly with strong macro tailwinds.
Rising investors and SIP growth boosting AMC prospects.
Listed AMC stocks offer indirect play on MF boom.
When we think of investments in Mutual Funds, we think of investments in schemes, i.e. products offered by Mutual Funds. But there is another way to play this buoyant segment. And that is, equity stocks of listed Asset Management Companies. As the industry grows, along with the growth of investors coming into the fold and the products they offer, the stocks will also grow. Let us look at the growth of the sector and the factors contributing to it.
The amount of money managed by the MF AMC industry, referred to as Assets Under Management (AUM), stood at Rs 67.4 lakh crore as on March 2025, and currently it is nudging Rs 80 lakh crore as on October 2025. As per projections by Crisil, AUM would touch Rs 150 lakh crore by March 2030. For perspective, MF AUM to GDP ratio stood at 11.1 per cent as of March 2020. As of March 2025, this pushed up to 19.9 per cent of GDP. The global average of this metric is 64 per cent, and in the USA it is at 124 per cent. The fact that it is at 19.9 per cent shows the scope for growth. What would lead to this growth? It can be bifurcated into two categories: macro factors and industry-specific factors. We start with the macro factors.
India is growing, and will remain growing, at the fastest pace among major economies of the world. In the first half of this financial year, April to September 2025, our GDP has grown at 8 per cent. That apart, the trend growth rate, i.e. sustainable growth rate as per economists, is in the range of 6.5 to 7 per cent. India has the largest working-age population in the world, which drives earnings, savings, consumption, and investments in financial products. Our gross domestic savings rate, at 29.2 per cent, is a shade higher than the global average of 28.2 per cent. Along with the growth of the economy, per capita income and disposable income are growing as well.
The increase in disposable income can fuel growth in various investment assets, including mutual funds. With increasing financialisation of savings, i.e. from land / building / property to deposits / stocks / bonds / mutual funds, the share of the pie is going to increase. As per RBI data, the share of Mutual Funds in the stock of financial assets of households has increased from 8 per cent in 2021-22 to 11 per cent in 2023-24.
The number of demat accounts in India, which was 5.5 crores as on March 2021 and 15.1 crores as on March 2024, has now touched 21 crores. This has led to more investors coming into the fold of Mutual Funds; the industry-specific factors are discussed below.
The number of investor folios (investor accounts), as per AMFI, has moved up to 25.6 crores as of October 2025. As of March 2020, the number of investor folios was 8.9 crores. There are overlaps in folios, i.e. one investor can have multiple accounts in multiple AMCs. The number of unique investors, identified as per PAN number, was 5.3 crore as on March 2025, as per AMFI. This also shows the scope for growth: in a country with a population of 145 crore with wide use of digital means and spread of banking, this should grow exponentially.
Systematic Investment Plan (SIP) has been a pillar of inflows for the industry, even in periods when inflows through the usual means of lump-sum subscription have waned. SIP AUM stood at Rs 13.4 lakh crores as on March 2025. As per Crisil projection, it would be Rs 41 to 44 lakh crores by March 2030. Investments through systematic investment plans have become a popular form of investing in mutual funds as they offer customers the opportunity to invest smaller amounts over longer periods and help mitigate the risk of market timing.
The popularity of equity funds, rising participation of investors, recent investor education initiatives, and apparent benefits of SIPs to households that traditionally did not invest in mutual funds indicate that growth in inflows from SIPs is expected to accelerate. The investor profile is now skewed towards individuals. As of March 2020, 52.4 per cent of investors in the MF industry were individuals. As of March 2025, it increased to 60.6 per cent.
The industry is witnessing a notable shift, with smaller cities, referred to as Beyond 30 (B-30) cities, emerging as significant growth drivers, alongside the established Top 30 (T-30) cities. Coming to processes in the industry, integration of technology has reduced processing times, streamlining tasks that once required days, weeks, or multiple in-person visits, into mere seconds, accessible through a smartphone.
The majority of assets in the industry are in equity, which are valued at market prices for NAV. If we take the growth in equity as the nominal GDP growth rate, it is expected to grow at a low double-digit digit, plus new investors coming into the fold. There are currently 6 listed Mutual Funds: HDFC AMC and Nippon AMC in mid-cap category and Birla AMC, UTI AMC, Canara Robeco AMC and Shriram AMC in small-cap category. There are two biggies in the pipeline.
The initial public offer (IPO) of ICICI Prudential AMC is from 12 to 16 December 2025, in the price band of Rs 2,061 to Rs 2,165. This is an Offer for Sale (OFS) from UK-based Prudential Corporation, offloading 9.9 per cent of their stake of 51 per cent, to the public. Reportedly, SBI MF is in the offing for their IPO, but it is still some time away. The new offerings would increase the listed space for investors in stocks of MFs, apart from their products.
Joydeep Sen is a corporate trainer (financial markets) and author.
(Disclaimer: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)
