Mutual fund folios nearly doubled in the last five years at 17.79 lakh crore in March 2024, up from 8.97 lakh crore in March 2020, ICRA Analytics said in its report. It noted that retail investors account for a large share of the total folios.

According to the quarterly data on folio and ticket size available on the Association of Mutual Funds in India (AMFI) website, retail investors accounted for nearly 91.3 per cent of the 16.49 folios in the mutual fund industry on December 2023 at 15.06 lakh crore. HNIs account for around 8 per cent at 1.33 lakh crore while institutional investors account for less than 1 per cent at 0.11 lakh crore folios.

On a y-o-y basis, the total number of folios increased by nearly 22 per cent from 14.57 lakh crore in March 2023.

“Increasing awareness about various investment options, primarily from smaller towns and cities, growing financial literacy, and the surge in interest among retail investors for investing in equities and bonds through the mutual fund route are contributing to the healthy growth in folios. However, mutual fund penetration is relatively low in the country so there is a lot of scope for growth,” Ashwini Kumar, Senior Vice President and Head of Market Data, ICRA Analytics, said.

“The burgeoning middle class and rising financial literacy coupled with professional fund management capability of mutual funds and regulatory oversight is likely to add confidence thereby prompting more and more people to resort to better financial planning to accrue savings,” Ashwini Kumar added.

According to ICRA Analytics, equity-oriented funds top the list of schemes across folios at 68.7 per cent, ETFs and fund of funds account for 11.7 per cent while hybrid schemes comprise 7.7 per cent as on December 2023. Retail investors had an average ticket size of ₹84,890 per account in Dec 2023, which is almost 20 per cent higher as compared to ₹70,775 per account in Dec 2022.

Redemptions from equity-oriented schemes drop 21 per cent in last five years

The industry’s total AUM (assets under management) has more than doubled in the last five years at ₹53.40 lakh crore in March 2024, as against ₹22.26 lakh crore in March 2020.

The AUM of large, mid-cap and small cap funds has also surged in the last five years.

“After a consistent surge in inflows since the beginning of this fiscal, the small-cap funds registered net outflows to the tune of ₹94 crore in March 2024. This could be on the back of some correction in the segment post the recent SEBI mandate requiring routine stress tests to be conducted on small and mid-cap funds to highlight the potential liquidity risk associated with these funds when the markets come under pressure,” Kumar said.

“However, we feel that the small-cap and mid-cap funds, which have witnessed a steady surge in AUM over the last year, are likely to hold investor interest in the medium to long term due to the value created in the entities supported by robust regulatory framework,” Kumar added.