The mutual fund industry in India has come a long way since its modest beginnings in 1963, when the Unit Trust of India was formed. The past couple of decades have seen it gather pace, creating an edge for itself in the personal finance space. The industry’s assets under management (AUM) have soared past Rs 30 trillion, clocking an impressive 18.5% compound annual growth rate (CAGR) since the turn of the century.

The mutual fund industry has seen increased participation from households in recent years, as a result of growing awareness, financial inclusion and improved access to banking channels. Between March 2015 and March 2020, the industry grew by 48mn folios to 89.7mn as on March 2020 folios, at 16.5% CAGR, driven almost entirely by individual investors (retail and high net worth individuals or HNIs).

The share of mutual funds in overall household savings has risen steadily since fiscal 2013; it was 2.9% in fiscal 2019. With the financial sector being particularly sensitive to improved economic conditions, and given the expected changes in saving patterns, the share of financial assets – direct and through mutual funds and insurance – in total financial savings is expected to increase going ahead.