Mutual funds boom in small states: Nagaland, Mizoram outshine big markets

Contribution of growth-oriented equity-based schemes remained the maximum at 54.56% followed by debt-oriented schemes and liquid schemes which contributed 13.20% and 14.64% respectively.

The domestic mutual fund industry continued its growth momentum in July 2025, with the Average Assets Under Management (AAUM) rising 19.01% year-on-year (YoY) and 2.96% month-on-month (MoM), according to the latest industry data, analysed by ICRA Analytics. The growth spanned across categories, with equity-oriented schemes leading the charge.

 

Equity Schemes Lead the Pack

 

Equity-based schemes remained the top contributor, accounting for 54.56% of total AAUM, followed by liquid schemes at 14.64% and debt-oriented schemes at 13.20%.

 

Ladakh topped the list with 90.95% of its mutual fund investments in equity schemes, followed by Lakshadweep at 83.55%.

 

Maharashtra Dominates Industry Share

 

 

When it comes to absolute contribution, Maharashtra remained the hub of mutual fund investments, accounting for 40.64% of industry AAUM. It was followed by New Delhi, Gujarat, Karnataka, and West Bengal. Collectively, the top five states made up more than 67% of total AAUM, highlighting concentration in India’s financial and metro hubs.

 

Small States, Big Growth

 

On a monthly basis, smaller states and union territories outperformed:

 

Mizoram saw the sharpest MoM growth at 11.94%.

 

Dadra & Nagar Haveli and Kerala followed with 5.90% and 5.06%, respectively.

 

On a yearly basis, however, Nagaland was the standout performer with an 84.43% rise in AAUM, while Dadra & Nagar Haveli also clocked a strong 45.99% YoY growth.

 

A Rare Decline in Lakshadweep

 

Interestingly, Lakshadweep was the only territory to see a fall in mutual fund AAUM, declining 41.82% YoY in July 2025. On the other end, Goa registered the slowest positive growth at 12.42% YoY. 

On a monthly basis, Mizoram witnessed the maximum growth in AAUM which stood at 11.94% followed by Dadra & Nagar Haveli and Kerala which grew 5.90% and 5.06%, respectively.

 

What This Means for Investors

 

The numbers reinforce three key trends for retail and institutional investors:

 

Equity appetite is rising – More investors are willing to ride market volatility for long-term wealth creation.

 

Tier-II and smaller states are catching up – Beyond metros, smaller geographies are showing rapid adoption of mutual funds.

 

Diversification matters – While equity dominates, debt and liquid funds continue to provide balance, especially in uncertain markets.