According to a report by Franklin Templeton India Mutual Fund, the Indian mutual fund industry has recorded a decade of remarkable expansion, growing its assets under management (AUM) at a compound annual growth rate (CAGR) of 20%.
The growth at 20% CAGR over the past decade significantly outpaced the 8% CAGR posted by the US mutual fund industry during the same period.
India’s mutual fund industry hit an all-time high in May 2025, with total AUM reaching ₹72.2 lakh crore. In the past year alone, the industry added ₹13.3 lakh crore in assets. Over the last 5 years, the AUM expanded at a 24% CAGR, reflecting the growing preference for mutual fund products among Indian investors.
A shift in market dynamics is evident as domestic institutional investors (DIIs) are playing an increasingly dominant role. In the 12-month period ending May 2025, DIIs brought in net inflows of ₹6 lakh crore. In contrast, foreign portfolio investors (FPIs) saw net outflows of ₹3.1 lakh crore. This development underlines the strength of local investment activity in maintaining market stability.
The ratio of mutual fund assets to bank deposits has tripled over the past decade. From just 12.6% in 2015, it crossed 31% in May 2025. This change indicates a noticeable transition in household financial behaviour, with more investors opting for mutual funds instead of keeping funds in low-yield deposit accounts.
Investor participation is rising in smaller towns and cities across the country. The share of AUM from B15 (beyond the top 15) cities rose from 25% in March 2020 to 35% by March 2025. Additionally, contributions from B30 cities increased from 16% in December 2020 to 18% in May 2025. These figures point to greater awareness and access to mutual fund investments in non-metro regions.
While Maharashtra, Delhi, Karnataka, and Gujarat continue to contribute the largest share of mutual fund AUM, other states are quickly catching up. Telangana registered the highest average annual AUM growth at 32.08%, followed by Haryana at 27.90%. These growth trends demonstrate that mutual funds are gaining traction across a wider geographical base.
The Indian mutual fund investor base continues to expand. As of May 2025, the number of investors reached 5.49 crore. During the month, 3.19 lakh new investors were added. Over the past year, the industry onboarded 89 lakh new investors, up from 78 lakh in the preceding year, showcasing increasing trust and acceptance among individuals.
Read More: How Big is the Mutual Fund Industry: Over 30% Participation Comes from Mutual Fund Investors!
Investor interest in equity mutual funds remains firm. Sectoral and thematic funds recorded the highest gross and net sales during the last 12 months. Most equity segments saw net inflows in May 2025, suggesting continued enthusiasm for equity-based investment products among the public.
The Indian mutual fund industry’s strong growth and expanding investor base reflect a deepening financial culture across the country. With rising domestic participation and increased reach beyond metros, mutual funds are becoming a key pillar in India’s investment landscape.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Jun 20, 2025, 3:33 PM IST
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