Mutual Fund Sector in India:
Evolution, Innovation, and
Future Outlook
Group 3
Digital Thinking
Introduction to mutual
01 06 Innovations
Table of 02
Fund
Historical Evolution 07 Challenges
Contents 03 Current Trends 08 Conclusion
04 Types of Mutual Funds 09 ICICI Prudential
Key takeways &
05 Future Outlook 10
recommendations
Introduction to the Mutual Fund Sector
A mutual fund is a trust that pools money from investors and invests it in
securities like stocks, bonds, and other investments (Association of Mutual
Funds in India (AMFI))
Diversification: Mutual funds offer exposure to a range of assets, reducing the
impact of poor performance in any single investment. Morningstar’s 2023
report highlights that diversified funds exhibit 20% less volatility than single-
asset investments (Morningstar, 2023)
Professional Management: Experienced fund managers oversee mutual funds,
and in India, managed funds have consistently delivered 2-3% higher returns
over the last decade than the average individual portfolio (SEBI Annual
Report, 2023)
In 2024, India's mutual fund industry reached approximately ₹68 Trillion in
assets, up from ₹10 Trillion in 2014, driven by rising retail participation (AMFI,
2023).
03
Historical Evolution
Inception and Early Growth (1963–1980s)
UTI Launch (1963): The Government of India, along with RBI, put the ball in motion for mutual fund investment (Reserve Bank of India
publications).
Growth in the 1980s: Inclusion of public sector banks like SBI and LIC broadened the base of investors.
In 1987, public sector mutual funds had INR 670 crore under their management (Reserve Bank of India publications).
Liberation stage (1990s)
Economic Reforms (1991–1992): Private and foreign companies were allowed, raising competition and diversity (SEBI reports, Economic
Survey of India).
Setup of AMFI (1995): An association for self-regulation, transparency, and market growth.
Data Point: AMCs increased from 9 in 1993 to 30 in 2000 (SEBI reports, Economic Survey of India).
Modernization (2000s)
SIPs: Launched in 2003, enabling investing with smaller monthly contributions.
SIPs accounted for 8% of total AUM in 2004 and reached over 25% in 2020 (AMFI, SEBI annual reports).
Accelerating Growth in AUM (2000s–2020s)
AUM Growth: In India, mutual fund AUM witnessed an increase of 31 trillion INR by 2020.
SEBI Regime: Enhanced KYC norms, transparency, and expense capping at every tier for safe investor protection.
AUM grew from INR 1.2 trillion in 2003 to over INR 31 trillion in 2020 (SEBI and AMFI reports, industry analyses).
Digital Enablement (2020–present)
Digital Platforms: Fintech innovations now allow investment in mutual funds online.
Scaling up Folios: Folios have crossed 10 crores as of 2023, driven by digital onboarding.
Data Point: Online transactions increased by 300% from 2019 to 2023 (AMFI, fintech market report).
04
Current Market Trends and Dynamics
1 . Increasing SIP Popularity: More retail investors are opting
for SIPs, finding it easier to invest regularly without timing
the market.
2. Understanding Systematic Investment Plan (SIP) : Fixed,
periodic investments in mutual funds (e.g., monthly) that are
managed by experts. Ideal for beginners who want
disciplined, flexible investing.
3. SEBI’s Micro SIP Initiative: Proposal to introduce
₹250/month SIPs to make investing more accessible.
4. Mutual Fund AUM Growth (Fiscal Year-End): (Mutual Fund
Industry in India - Size, AUM and Trends, 2024)
2019-20: ₹22.26 lakh crore
2020-21: ₹31.43 lakh crore
2021-22: ₹37.5 lakh crore
2022-23: ₹40.5 lakh crore
2023-24: ₹54.1 lakh crore
05
Types of Mutual Funds
A. Equity Funds : (Types of Mutual Funds in India, n.d.)
Primarily invest in stocks and other securities.
Higher risk due to market volatility, but potential for higher returns.
B. Debt Funds : (Types of Mutual Funds in India, n.d.)
Invest mainly in fixed-income securities like government and corporate bonds.
Generally less risky than equity funds, providing income through interest.
C. Hybrid Funds : (Types of Mutual Funds in India, n.d.)
Also known as balanced funds; invest in both equities and fixed-income
securities.
Aim to balance risk and return by diversifying across asset classes.
D. Index Funds : (Types of Mutual Funds in India, n.d.)
Passively invest in all companies within a specific index.
Simple, low-cost way to grow money in line with market performance.
E. Thematic Funds : (Types of Mutual Funds in India, n.d.)
Focus on specific themes or trends (e.g., renewable energy, technology).
Example: A "green energy" fund invests in companies embracing sustainable
energy.
06
Future Outlook and Opportunities
1. Increased Penetration Through Digital Channels
Rise of Digital Platforms: User-friendly investment platforms
enhance accessibility and engagement, transforming mutual
fund distribution. (Tailwind, 2024)
AI & ML Integration: Advanced technologies provide data-
driven insights and personalized recommendations, optimizing
investor decision-making. (Tailwind, 2024)
Cybersecurity Focus: As digital investments expand, robust
cybersecurity measures are essential to protect sensitive
financial data. (Tailwind, 2024)
2. Rising Emphasis on ESG and Responsible Investing
Growth of ESG Funds: Increasing demand for funds that align
with sustainable practices, driven by socially conscious
investors. (Sridhar Sahu, 2024)
Long-term Wealth Creation: ESG funds focus on sustainable
returns, attracting investors interested in positive societal
impacts. (Sridhar Sahu, 2024) 07
Innovations
Technological Innovations
Data analytics for personalisation
Use of Blockchain Technology (Bajaj Finserv Asset Management Limited, n.d.; Forbes
India, 2021)
Exmaples: Franklin Templeton announces that shares of
the Franklin OnChain U.S. Government Money Fund Mutual fund companies reap the benefit of data
(FOBXX) (the “Fund”) are available for transfer from one analytics to understand investor preferences and
shareholder to another shareholder (“peer-to-peer”) on behaviour.
the public blockchain for seamless Transactions
Personalised recommendations based on individual
(Franklin Templeton, 2024).
risk tolerance, financial goals, and investment
history enhance the investor
Robo-advisors
(Bajaj Finserv Asset Management Limited, n.d.; Forbes
India, 2021)
The rise of robo-advisors has brought algorithm-
driven financial advice to investors.
These digital platforms use algorithms to analyse
investor profiles and recommend a suitable portfolio,
making investment decisions more accessible and
cost-effective.
08
Innovations
Product Innovation
ETFs (Exchange-Traded Funds): ETFs have
been a transformative innovation. They offer
low-cost, tax-efficient, and liquid investment
options, appealing to retail and institutional
investors alike.
Target-Date Funds: These funds have
simplified retirement savings for average
investors.
09
ICICI Prudential
Asset Under Management: As of H1-FY2024, the AUM managed by ICICI Prudential was ₹3,204.91
billion with a growth in assets year-over-year at 17.9%. (ICICI Prudential H1-FY2024 Performance
Report).
ICICI Prudential Asset Management, founded in 1993 and partnered with UK’s Prudential plc in
1998, is one of India’s largest asset managers, offering a diverse portfolio of equity, debt, hybrid,
and solution-oriented funds.
Equity Funds: Designed for long-term Debt Funds: These funds cater to conservative
capital appreciation, targeting investors investors aiming for stable returns with
with higher risk tolerance. relatively lower risk.
Hybrid Funds: These include both Equity Solution-Oriented Funds: Developed for specific
and Debt funds which help in balancing risk financial goals, such as retirement planning and
children's education
12
Challenges
1. Volatility in Assets Under Management (AUM) 3. Low Penetration in Tier 2 and Tier 3 Cities
The Indian mutual fund industry's AUM showed Despite a significant increase in assets under
fluctuations in 2023 due to global economic management (AUM), reaching ₹68 trillion in FY24 (a
uncertainties, though it rebounded towards the 35% growth year-on-year), mutual fund penetration
latter part of the year. remains limited outside urban areas (LiveMint,
2024).
In September 2024, AUM reached approximately ₹68
trillion, a significant increase from around ₹10 trillion 4. Volatility and Economic Uncertainty:
a decade ago.
Equity-oriented funds, while experiencing strong
fluctuations demonstrate the cyclical nature of the growth (55% in FY24), remain highly sensitive to
industry (LiveMint, 2024). global economic factors like oil price fluctuations
and geopolitical instability (Fisdom, 2024).
2. Pressure from Fee Structures and Competition
sector grappling with a shift from traditional fee
models to more transparent, unbundled fee-based
advisory services. (Money Simplified, 2023)
10
Key Takeaways
Robust Growth: The mutual fund industry in India saw AUM reach ₹68 trillion by
2024, supported by increased SIPs and digital transformation.
SIP Contributions: Monthly SIP investments totaled ₹14,000 crores, highlighting
investor preference for regular, disciplined investing.
Technological Advancements: The use of robo-advisors and AI-driven platforms has
made investing more accessible, offering personalized insights and boosting
engagement.
ESG Funds Popularity: Growing interest in sustainable investing has increased the
demand for ESG funds, appealing to socially responsible investors.
Challenges in Market Penetration: Despite significant growth, penetration remains
low in Tier 2 and Tier 3 cities, indicating room for further expansion.
13
RECOMMENDATIONS
Financial Literacy Initiatives: Companies should implement educational programs to improve understanding of mutual
funds, particularly in smaller cities.
Tech Integration: Continue leveraging AI and robo-advisors for personalized, efficient investment solutions.
Diversified Offerings: Expand ESG and thematic funds to cater to evolving investor preferences.
Transparent Cost Structure: Maintain clear and competitive fees to attract and retain investors.
Targeted Digital Marketing: Focus on promoting SIP benefits and sustainable investment options to engage a wider
audience effectively.
14
Counclusion
The mutual fund industry is growing fast with digital tools.
More people are choosing SIPs, with 60% of investors now using this
option to invest a fixed amount regularly. Another big trend is the
rise of ESG (Environmental, Social, and Governance) funds, as more
people want investments that are sustainable and socially
[Link] total Asset of mutual funds reached INR
54.1 lakh crore by 2023-24.
As companies add features like robo-advisor and online Sign-ups,
investing becomes simpler. This situation of the mutual fund industry
will attract more investors and continue its growth in the financial
market.
11
Thank You
Jinay Shah - AU2314041
Vidit Desai - AU2314046
Rutvi Gandhi - AU2314068
Pruthvish Bhatt - AU2314069
Shashank Jain - AU2314109
Kanisha Shah - AU2314063
Mamta Choudhary-AU2314032
Jyot Thakker - AU2110239
References
AMFI India. (n.d.). Association of Mutual Funds in India. Retrieved from [Link]
Franklin Templeton. (2024). Franklin Templeton OnChain U.S. Government Money Fund – Digital Assets Technology.
Retrieved November 12, 2024, from [Link]
managers/digital-assets/digital-assets-technology
Morningstar. (n.d.). Morningstar. Retrieved from [Link]
Securities and Exchange Board of India. (n.d.). SEBI. Retrieved from [Link]
Reserve Bank of India. (n.d.). RBI. Retrieved from [Link]
Government of India. (n.d.). Union Budget. Retrieved from [Link]
Bag, S. (2024). Stricter regulations: SEBI is tightening fund category regulations to prevent market abuse and ensure fair
practices.
Bag, S. (2024). Investor protection: New guidelines require AMCs to implement mechanisms for detecting and preventing
misconduct.
Priyadarshan, P., & Parulekar, A. (2023). Enhanced disclosures: Comprehensive disclosure norms aim to prevent
greenwashing, ensuring investors have accurate information.
LiveMint. (2024, September). SBI mutual fund AAUM surges to record ₹11 lakh crore in Q2, surpassing competitors ICICI
and HDFC. Retrieved from [Link]
[Link]
Money Simplified. (2023). India's mutual fund growth story: 2023 trajectory and future outlook. Retrieved from
[Link]
Fisdom. (2024). Market overview and analysis of mutual fund performance. Retrieved from [Link]
Bajaj Finserv. (2024, August 6). Mutual fund industry in India - Size, AUM and trends. Retrieved November 11, 2024, from
[Link]
Bajaj Finserv. (n.d.). Types of mutual funds in India. Retrieved November 11, 2024, from
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