Deciphering the rise in MF AUM

The Indian mutual fund industry has come a long way in the last few years. The asset under management (AUM) of the domestic mutual fund industry has increased from Rs. 5.05 lakh crore at the end of March 2008 to Rs. 22.86 lakh crore at the end of June 2018, showing an increase of 4.5 times in the last 10 years. There are two distinct factors that have contributed to such a rise in AUM. First is the rise in equity investment and the second is the improved retail participation.

The proportion of the equity-oriented schemes in the total AUM of domestic MF industry has increased by 610 basis points or 6.1 per cent in the last one year alone. The proportionate share of equity-oriented schemes is now 41.2 per cent of the industry assets in June 2018, up from 35.1 per cent in June 2017. In the same period, the proportionate share of debt-oriented schemes is down to 33.3 from 41.1 per cent.

The second factor that has helped such rise in AUM is improved participation from the retail investors. The credit for this goes to pro-investors approach by the market regulator, SEBI and investor awareness programme taken by industry body, AMFI. The individual investors now major share of industry assets, i.e. 52 per cent at the end of June 2018, compared with 47.6 per cent same period, a year ago. Institutional investors account for 48 per cent of the assets currently out of which corporates account for 90 per cent. The rests are Indian and foreign institutions and banks.