Mutual fund penetration in the Indian markets is low when compared to its global peers. However, the long term horizon offers potential to capitalise on financial savings. India has an assets under management (AUM) to GDP ratio of 12% and this is after China, which has an AUM to GDP ratio of 13%. The world average AUM to GDP ratio is at 63% with developed markets such as the US and Canada at 120% and 81%. Crisil during its India Investment Research Conclave stated that the mutual fund industry is expected to channelise individual savings going forward. The growth drivers for the Indian mutual fund industry would be the likely pick-up in the economy, growing investor base, higher disposable incomes, greater investible surplus, and deeper geographical penetration.
Better awareness, ease of investing through digitisation and a gradual pick up in corporate earnings expected to support growth. Crisil said assets under management (AUM) in equities saw a CAGR growth rate of close to 13.5% in the decade between March 2010 to March 2020. Additionally, from the period between March 2020 to March 2025, the AUM is projected to be at 15% CAGR.
Ashu Suyash, MD and CEO of Crisil said, “The mutual fund industry has seen a large rate of growth over the last 20 years, that growth rate has been a spectacular CAGR of 18%. Despite such a strong growth rate, the penetration of mutual funds in India continues to remain low, the AUM to GDP ratio is 12%. It just tells us the strong growth that is still to come for the mutual fund industry.” She also explained that globally and in India the theme of investment research, data driven platforms, among others have gained importance.
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