MUTUAL FUND BRIEFING – MARCH 2025
March 2025 saw overall mutual fund AUM expand from ₹64.53 Trillion to ₹65.74 Trillion; despite net outflows of ₹(1.64) Trillion. AUM accretion in equity oriented funds in March were triggered by a robust performance by Nifty and Sensex. Active debt funds saw net outflows of ₹(2,02,663) Crore, which is normal under advance tax pressures. Active equity funds saw modest inflows of ₹25,082 Crore, sharply lower than the average of FY25.
Hybrid funds saw net outflows of ₹(705) Crore, after a long gap; while passive funds saw robust inflows of ₹14,149 Crore. In the equity story, thematic funds were absent, but flexi-cap funds, small cap funds and mid-cap funds witnessed strong inflows. Gross SIP flows in March 2025 were stable at ₹25,926 Crore, but SIP stoppage spiked to a record 128.3%.
KEY TRENDS IN MUTUAL FUNDS – SEGMENT LEVEL (MARCH 2025)
Here are mutual fund segment level trends for March 2025.
- Average assets under management (AAUM) of all mutual fund schemes tapered on MOM basis from ₹67.58 Trillion to ₹66.70 Trillion in Feb-25. The AAUM is lower than the December 2024 peak of ₹69.33 Trillion. However, average AUM is 21.3% higher yoy.
- Last couple of years saw a steady shift in AUM mix from active debt to active equity; but intensity has been reducing. The share of active equity funds in AUM for March 2025 was up 40 bps from 58.8% to 59.2% MOM; although AUM share is up 140 bps yoy.
- Passive fund share was 30 bps higher MOM at 12.6% in March 2025 but 30 bps lower yoy. The share of active debt funds improved 10 bps MOM from 15.0% to 15.1% in March 2025 while share is down 120 bps yoy. Liquid / money market funds share fell 70 bps MOM from 13.9% to 13.2% in March 2025, but up 20 bps yoy.
- The AUM shares of individuals and institutions has approximately stabilized. Between March 2024 and March 2025, the share of individual investors in overall MF AUM is down 10 bps from 60.5% to 60.4%. Individual share had peaked at 61.9% in September 2024, and has progressively fallen with the market correction.
- How individual investors allocated across MF categories? As of March 2025, individual investors have a share of 36% in active debt funds but just 11% in short term money market schemes; a whopping 88% of equity fund assets, but just 13% of passive assets.
- What about an individual investor’s allocation basket? As of March 2025, individual investors have 86% of their MF portfolio in active equity schemes and 9% in active debt funds. Liquid funds at 2% and ETFs at 3% are fairly small. Institutions and corporates have 31% of their corpus in liquid funds, 27% in ETFs / FOFs, 24% in active debt funds and just 18% in active equity funds.
As of March 2025, mutual fund AAUM grew 21.3% yoy. Assets of individual investors in this period grew 21.0% while AUM of institutional investors grew 21.6%.
KEY TRENDS IN MUTUAL FUNDS – FOLIOS AND TICKET SIZES (MARCH 2025)
Folios are investor accounts unique to an AMC; a good barometer of retail intensity.
- There were 23.45 Crore folios as of the close of March 2025 of which retail investors accounted for nearly 91.6%. In addition, HNIs accounted for 7.9% of folios while institutions accounted for balance 0.6%. 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 March 2025, the number of mutual fund folios have jumped from 3.95 Crore to 23.45 Crore. That is a jump of 494% in folios. Since Sep-14, folios have grown at CAGR (compounded annual growth rate) of 18.43%.
- 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. For debt funds, average ticket size is up 16% yoy at ₹18.29 Lakhs. The net AUM of Indian mutual funds at ₹65.74 Trillion is spread across 23.45 Crore folios, giving a per folio ticket size of ₹2.80 Lakhs.
- Contrary to popular perception, retail investors are not myopic in their approach to equity funds. As of March 2025, retail investors hold 55.1% of equity fund assets and 39.8% of non-equity assets for over 2 years. Retail investors have held 73% of equity funds for at least 1 year.
The surge in individual investor share is linked to SIP flows and NFO flows. While gross SIP flows are still robust, rising SIP stoppage ratio at 128.3% is a concern.
KEY TRENDS IN MUTUAL FUNDS – GEOGRAPHICAL MIX (MARCH 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 March 2025 with February 2025, T30 assets were down -1.45% at ₹54.53 Trillion. Total assets of B30 centres shrank by -0.63% to ₹12.17 Trillion. If we only look at the share of individuals; in March 2025, B30 cities accounted for 27.22% of individual assets while share of individuals in T-30 cities stood at 72.78%.
- Despite the Direct route available since 2013, only 47% 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.
The one signal that comes out is the reducing retail participation in mutual funds, which could be attributed to the macro risks and volatility in the markets.