Mutual Fund Industry in India

The mutual fund industry is a collective investment vehicle that pools money from investors and invests it in securities like stocks, bonds, and short-term debt.
Mutual Fund Industry in India
3 min

The history of mutual funds in India began in 1963 when the Government of India launched Unit Trust of India. Since then the mutual fund industry has had an unstoppable journey and thousands of investors today invest in mutual fund schemes, making it a formidable investment segment.

In 2023, the Indian mutual fund industry continued to bull run as it grew by 23 percent to Rs. 49.05 lakh crore by end of November 2023 compared to Rs. 39.88 lakh crore as on December 31, 2022. The industry size is expected to grow to Rs. 100 lakh crore by 2030, signalling a robust increase and continued dominance of the mutual fund industry in the investment categories.

If you are interested in investing in mutual funds and knowing more about the mutual fund industry, continue reading this to know all its important components.

What is the AUM of Indian mutual fund industry?

AUM, or the Assets Under Management, refers to the market value of all the securities held in various mutual fund schemes. At the end of the financial year 2023-24, the mutual fund industry in India for the first time ever crossed the AUM milestone of Rs. 50 lakh crore. In the financial year 2023-24, Indian mutual fund industry’s net assets under management grew by 35.5 percent to reach Rs. 53.4 lakh crore.

Growth of AUM of Indian mutual fund industry in last 5 years

Despite a worldwide slowdown of the financial markets in the past five years that were marked by COVID19 pandemic and the turbulence and wars in Europe and Middle East, the Indian mutual fund industry has shown incredible resilience and significant growth. The mf industry AUM doubled in the past five years as it grew from Rs. 22.26 lakh crore in 2019-20 to Rs. 54.1 lakh crore in 2023-24.

The growth of Indian mutual fund industry can be assessed by the mutual fund AUM at the end of each of the past five financial years as recorded here:

  • Rs. 22.26 lakh crore in 2019-20
  • Rs. 31.43 lakh crore in 2020-2021
  • Rs. 37.5 lakh crore in 2021-22
  • Rs. 40.5 lakh crore in 2022-23
  • Rs. 54.1 lakh crore in 2023-24

What is the future of mutual fund industry in India?

India’s mutual fund industry is expected to continue its bull run with one credible report suggesting that India’s mutual fund AUM will reach Rs. 100 lakh crore by 2030. As the data of the last five years highlights a rapid growth, despite global setbacks, of the mutual fund industry in India, it is likely that the trend will continue and investors will remain attracted to the mutual funds.

With the number of investors opting for mutual funds through either SIP investment or lumpsum investment continuing to grow, it shows a stable long-term behaviour of mutual funds despite all the risks.

How mutual fund industry works in India?

Mutual fund industry works in a very systematic manner that is devised to ensure transparency, elaborate the investment objective and make available the risk assessment. Here is how it works:

  • The first step begins with the creation of a mutual fund by an asset management company that designs the fund with specific objectives and strategy.
  • The second step is called pooling of funds and refers to the investments made by investors who purchase units at the current Net Asset Value.
  • What follows next is portfolio management wherein fund managers are tasked to oversee an investment process against a fee for researching, selecting and managing the securities.
  • The last step of the process is redemption and exit from the fund wherein the investors sell their units at the prevailing Net Asset Value.

Opportunities for mutual fund industry in India

In the earlier decades, the biggest challenge faced by the mutual fund industry in India was the broad base financial illiteracy, inaccessibility to financial markets, and aversion to anything risky. All these components are now rapidly getting majorly resolved that open a great range of opportunities for the Indian mutual fund industry.

Challenges for mutual fund industry in India

The mutual fund industry has come a long distance since its introduction in India, however, there are challenges that still need to be overcome. The foremost challenge remains that of a perception that mutual funds are overwhelmingly associated with risk, which detracts lot many potential investors. The industry also needs to reach out to the investors in tier 2 and 3 towns and villages for which it needs a robust distribution network.


Mutual fund industry remains one of the strong pivots of the investment sector in India. The last decade has proven that mutual funds are an incredibly stable investment product as it outlived catastrophic economic events like a COVID19 pandemic.

If you want to invest in mutual funds, you must understand the risks associated with it and comprehensively compare mutual funds to select the ones best suited to your investment goals. The Bajaj Finserv Mutual Funds Platform, with over 1,000 mutual funds to choose from, is a perfect place to begin your investment journey.

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Frequently asked questions

How big is mutual fund industry in India?
At the end of the financial year 2023-24, the mutual fund industry in India had assets under management worth Rs. 54.1 lakh crore.
How does the mutual fund industry work?
Mutual fund industry works by pooling money from multiple investors which is then used for the purpose of investments.
What is the market size of mutual fund industry?
At the end of the financial year 2023-24, the mutual fund industry in India had assets under management worth Rs. 54.1 lakh crore.
Why is mutual fund industry growing?<br><br>
Mutual fund industry is growing in India because of increased and unprecedented accessibility to financial markets.
How many mutual fund companies are there in India?
There are 44 mutual fund or asset management companies in India.
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The information contained in this article is for general informational purposes only and does not constitute any financial advice. The content herein has been prepared by BFL on the basis of publicly available information, internal sources and other third-party sources believed to be reliable. However, BFL cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. 

This information should not be relied upon as the sole basis for any investment decisions. Hence, User is advised to independently exercise diligence by verifying complete information, including by consulting independent financial experts, if any, and the investor shall be the sole owner of the decision taken, if any, about suitability of the same.