In the last article, we understood what mutual funds are. Before moving ahead with the technical stuff, let us brief you on the history of the mutual fund industry in India and the world. We need to understand one important thing to get a complete understanding of this article.
Total Asset Under Management (AUM) is the total amount of money managed by the mutual fund. You can find the AUM of any mutual fund in the basic details section of the fund on sharpely. The AUM of Parag Parikh Flexi Cap Fund is shown below.
To promote saving and investing habits in the country, the government and the Reserve Bank of India (RBI) established the Unit Trust of India (UTI) in 1963. The UTI launched its first scheme named Unit Scheme (US 64) in 1964.
A few years after that, in 1978 the Industrial Development Bank of India (IDBI) took over the functioning of UTI from the RBI. By the end of 1988, UTI had an AUM of Rs. 6700 crores.
The year 1987 marked the entry of public-sector mutual funds. The first one to set up a mutual fund after UTI was the SBI mutual fund followed by many public sector banks, Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC) in 1989 and 1990.
With the establishment of the Securities and Exchange Board of India (SEBI), Indian markets became more regulated and opened their doors to private players. Kothari Pioneer (now merged with Franklin Templeton MF) was the first private player in the mutual fund space.
At the end of FY 2022, open-end mutual fund assets worldwide were $64.67 trillion (that is a lot of money!). To put that into perspective India being the 5th largest economy in the world has a GDP of $ 3.4 trillion.
The United States has the largest mutual fund industry in the world with more than $27 trillion in Assets Under Management (AUM) at the end of 2022.
Even though investing in equities is considered risky, the mutual fund industry has been growing rapidly in the past few years in India. Thanks to campaigns like “Mutual funds sahi hai", growing financial literacy, and various tax incentives, the mutual fund industry has prospered a lot.
The Assets Under Management (AUM) of the Indian mutual fund industry is consistently growing (as shown below) and stood at Rs. 39.46 trillion as of 28 February 2023. The AUM of the Indian MF Industry has grown from ₹ 8.14 trillion as on February 28, 2013, to ₹39.46 trillion as on February 28, 2023, around 5 fold increase in a span of 10 years.
The total number of accounts (or folios as per mutual fund jargon) as on February 28, 2023, stood at 14.42 crore. There are 43 Asset Management Companies (AMCs) in India.
These numbers might sound a lot but there is still a lot of room for the mutual funds to grow. In India, around 3% of the total population invests in equities. In developed economies like the USA, more than 50% of the population invests in equity. So, with the increase in disposable income and growing financial literacy, it is predicted to grow further.
According to the Association of Mutual Funds in India (AMFI), there are 43 registered AMCs in India. You can find the complete list of AMCs here
In India, the first mutual fund company was the Unit Trust of India (UTI). It was established by the government and the Reserve Bank of India (RBI) in 1963.
The total assets under management of the Indian mutual fund industry stood at ₹39.46 trillion as on February 28, 2023.