Mutual fund industry set to double AUM to Rs 100 lakh crore by 2030: Report

Mutual Fund Outlook: The mutual fund industry in the country is projected to witness substantial growth, with its assets under management (AUM) expected to double to Rs 100 lakh crore by 2030, according to a recent report by Axis Capital. This surge follows the industry's achievement of doubling its AUM to Rs 50 lakh crore by December 2023 within a span of four years.

The report, titled "India Asset Management AUM on the Double: Closing in on 100 Trillion," anticipates a compound annual growth rate (CAGR) of 14 per cent for the industry. This growth trajectory is fuelled primarily by increased retail participation, boosted by rising savings rates. It is predicted that household savings will continue to grow at a pace similar to the nominal GDP growth rate of 11 per cent CAGR between 2023 and 2030.

Despite this optimistic outlook, the report highlights that mutual fund penetration in India remains relatively low at only 15 per cent of GDP, significantly lower than the global average of 74 per cent. Furthermore, with 42 million unique investors, mutual funds cover less than 5 percent of the working-age population, indicating ample room for expansion, particularly in terms of monthly systematic investment plans (SIPs), which currently average at Rs 2,300.

The report also highlights the dominance of major players in the industry, with the top eight asset management companies currently managing 73 per cent of the industry's AUM. This dominance is expected to persist, driven by their robust distribution networks.

The mutual fund industry is poised for significant growth driven by increasing retail participation and a conducive savings environment, with ample opportunities for expansion in SIPs and other investment avenues.