Mutual fund industry pulls back bowstring for a $33 trillion AUM bullseye

Vision document takes aim at every household with tailored products, focused strategies

The mutual fund (MF) industry has set its sights on $33 trillion in assets under management (AUM) and an investor base of 260 million by 2047, aligning its growth vision with the central government’s Viksit Bharat initiative.

 

“This growth will catapult India’s MF assets from the current gross domestic product ratio of 19 per cent to over 110 per cent, positioning India alongside global investment powerhouses,” the Association of Mutual Funds in India (Amfi) said.

 

At present, the industry manages ₹67.3 trillion, or $769 billion. The number of unique investors stands at 53.3 million.

 

In its previous vision document in 2019, the industry had targeted an AUM of ₹100 trillion by 2030.

 

The ideas put forward by the association to boost penetration include developing new product categories to meet emerging demographic needs, building Cloud-enabled capabilities for real-time and secure operations, and implementing regional strategies, among others.

 

According to Amfi, the distribution network, projected to grow fivefold during this period to 1 million, will ensure advisory support for the expanding investor base.

 

The association has taken several steps in recent weeks to broaden investor participation. On Saturday, Amfi announced the Farm to Financial Freedom initiative in collaboration with Amul. 

 

“The project aims to equip farmers with financial knowledge through 1,000 investment awareness programmes for 75,000 dairy farmers, 70 per cent of whom are women,” Amfi said.

 

In February, the regulator and the industry launched three initiatives — a ₹250 systematic investment plan (SIP) for smaller investments, Tarun Yojana to encourage young investors, and MF Investment Tracing and Retrieval Assistant (MITRA) to help track and recover forgotten investments.

 

Tarun Yojana is aimed at school students. Under this initiative, the industry will provide financial literacy training to teachers and students, while also awarding the top students ₹2,400 in their MF SIP accounts.

 

The vision document highlighted a lack of investor awareness as the key reason behind the low penetration of MFs. “Low financial literacy in Tier-II and Tier-III cities and a preference for traditional, more straightforward, and perceived-safer options such as fixed deposits, the Public Provident Fund, and gold have hindered broader adoption,” it observed.

 

Despite record growth in AUM and investor count following the pandemic, the industry still lags in penetration compared to most other investment options.

 

“Over the years, the industry has seen remarkable progress in AUM and SIP contributions. However, this progress only scratches the surface of its true potential. Less than 5 per cent of India’s 1.4 billion population actively participates in MFs — a stark contrast to mature markets such as the US, where MF penetration exceeds 50 per cent,” said Navneet Munot, chairman, Amfi.