MUTUAL FUND BRIEFING – JANUARY 2024
The month of January 2025 saw overall mutual fund AUM grow marginally from ₹66.93 Trillion to ₹67.25 Trillion; despite net inflow of ₹1.88 Trillion into mutual funds. The gap can be explained by substantial price depletion in equities in Jan-25. In terms of debt fund flows, it was a case of treasury outflows coming back; a trend that has become pronounced in recent months. Hybrid and Passive funds saw healthy inflows, but AUM growth was hit by equity price depletion. Robust equity inflows were driven by thematic, multi-cap, small cap, and mid-cap funds; a clear case of alpha hunting. SIP flows in January 2025 were robust at ₹26,400 Crore, but SIP stoppage ratio spiked to a record 109.5%.
KEY TRENDS IN MUTUAL FUNDS – SEGMENT LEVEL (JANUARY 2025)
Here are the mutual fund segment level trends for January 2025.
- Average assets under management (AAUM) of all mutual fund schemes was back at the November 2024 levels of ₹68.05 Trillion, compared to average AUM of ₹69.33 Trillion in December 2024. However, average AUM is still up 28.7% yoy.
- In last couple of years, we saw a steady shift in AUM mix from active debt to active equity; but intensity has reduced. The share of active equity funds in AUM for January 2025 was down 70 bps from 60.6% to 59.9% MOM; but AUM share was up 300 bps yoy.
- Passive fund share was 10 bps lower MOM at 12.2% in January 2025 but a full 60 bps lower on yoy basis. The share of active debt funds was up 20 bps MOM from 14.6% to 14.8% in January 2025 while share is down 220 bps yoy. Liquid / money market funds share bounced 50 bps from 12.5% to 13.5% MOM in January 2025 but down 40 bps yoy.
- There is a distinct shift in AUM share from institutional investors to individual investors. The falling yields on debt funds are pushing investors into equity fund SIPs. Between January 2024 and January 2025, the share of individual investors in the overall MF AUM composition has gone up 80 basis points from 60.1% to 60.9%.
- How much have individual investors allocated across various categories of mutual funds? As of January 2025, individual investors have a share of just 35% in active debt funds and just 12% in short term money market schemes. Individual investors have 88% market share of equity fund assets, but just 12% of passive fund AUM.
- What about the individual investor’s allocation basket. As of January 2025, individual investors have 87% of their MF portfolio in active equity schemes and 9% in active debt funds. Liquid funds at 2% and ETFs at 2% are fairly small. Institutions and corporates have 30% of their corpus in liquid funds, 27% in ETFs / FOFs, 25% in longer active debt funds and just 18% in active equity funds.
As of the close of January 2025, mutual fund AAUM has grown by 28.7% yoy. Assets of individual investors in this period grew by 30.3% while growth in AUM of institutional investors was modest at 26.1%.
KEY TRENDS IN MUTUAL FUNDS – FOLIOS AND TICKET SIZES (JANUARY 2025)
Folios are investor accounts unique to an AMC and are a good barometer of retail intensity.
- There were total of 22.92 Crore folios as of the close of January 2025 of which retail investors accounted for nearly 91.6%. In addition, HNIs accounted for 7.9% of folios while institutions accounted for balance 0.5%. In case of active debt funds, retail investors account for 71.6% of the folios, while HNI investors account for 26.2%. HNIs also have high share of folios of liquid funds (25.0%) and hybrid funds (24.3%).
- Between March 2009 and September 2014, mutual fund folios contracted from 4.76 Crore to 3.95 Crore. However, between September 2014 and January 2025, the number of mutual fund folios have jumped from 3.95 Crore to 22.92 Crore. That is a jump of 480% in folios. Since Sep-14, folios have grown at CAGR (compounded annual growth rate) of 18.53%.
- Let us look at average ticket size for equity and debt products. For equity funds (predominantly a retail product), the average ticket size is up just 1% yoy at ₹1.94 Lakhs. In case of debt funds, the average ticket size is up 16% at ₹18.29 Lakhs. The net AUM of Indian mutual funds at ₹67.25 Trillion is spread across 22.92 Crore folios, giving a per folio ticket size of ₹2.93 Lakhs.
- Unlike the popular perception, retail investors are not myopic in their approach to equity funds. As per data for January 2025, retail investors hold 55.1% of equity fund assets for more than 2 years.
The surge in individual investor share is linked to SIP flows and NFO flows. The higher stickiness is from the lessons learnt COVID, that persisting is the best idea in SIPs.
KEY TRENDS IN MUTUAL FUNDS – GEOGRAPHICAL MIX (JANUARY 2025)
How are cities and towns contributing to the mutual fund growth story?
- The mutual fund market is divided into T30 (top-30) cities and B30 (cities beyond top-30). If you compare January 2025 with December 2024, T30 assets were down -1.73% at ₹55.52 Trillion. Total assets of B30 centres shrank by -2.36% to ₹12.53 Trillion. If we only look at the share of individuals; in January 2025, B30 cities accounted for 27.16% of individual assets while share of individuals in T-30 cities stood at 72.84%.
- Despite the Direct route available since 2013, only 46% of the overall assets came through the Direct route, with just about 26% of retail investors and 28% of HNIs investors coming through the direct route.
January was a month when liquid debt inflows dominated. However, the big challenge now is the SIP stoppage ratio.
