Key mutual fund trends observed in February 2025

MUTUAL FUND BRIEFING – FEBRUARY 2025

February 2025 saw overall mutual fund AUM contract from ₹67.25 Trillion to ₹64.53 Trillion; despite net inflows of ₹40,063 Crore into mutual funds. That was due to value depletion in equity oriented funds during February 2025. Active debt funds saw net outflows of ₹(6,526) Crore, hinting at liquidity pressure in the system. Active equity funds saw good inflows of ₹29,303 Crore, albeit much lower than the average of FY25. Hybrid and Passive funds saw net inflows of ₹7,050 Crore and ₹10,249 Crore respectively. Thematic, multi-cap, small cap, and mid-cap funds drove equity fund inflows; hinting at alpha hunting. Gross SIP flows in February 2025 were stable at ₹25,999 Crore, but SIP stoppage spiked to a record 122.8%.

KEY TRENDS IN MUTUAL FUNDS – SEGMENT LEVEL (FEBRUARY 2025)

Here are the mutual fund segment level trends for February 2025.

• Average assets under management (AAUM) of all mutual fund schemes was less impacted than net AUM. At ₹67.58 Trillion, the Feb-25 AAUM was lower than the December 2024 peak at ₹69.33 Trillion. However, average AUM is still up 23.9% 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 February 2025 was down 110 bps from 59.9% to 58.8% MOM; but AUM share was up 140 bps yoy.
• Passive fund share was 10 bps higher MOM at 12.3% in February 2025 but 40 bps lower yoy. The share of active debt funds improved 20 bps MOM from 14.8% to 15.0% in February 2025 while share is down 150 bps yoy. Liquid / money market funds share bounced 90 bps from 13.0% to 13.9% MOM in February 2025, and up 50 bps yoy.
• There is a distinct shift in AUM share from institutional investors to individual investors. However, the pace of shift has slowed. Between February 2024 and February 2025, the share of individual investors in overall MF AUM is down 40 bps from 60.3% to 59.9%. Individual share had peaked at 61.9% in September 2024, and has gradually fallen since.
• How have individual investors allocated across various MF categories? As of February 2025, individual investors have a share of 35% in active debt funds but just 11% in short term money market schemes. Individual investors have 88% market share of equity fund assets, but just 13% of passive fund AUM.
• What about the individual investor’s allocation basket? As of February 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 longer active debt funds and just 18% in active equity funds.

As of the close of February 2025, mutual fund AAUM has grown by 23.9% yoy. Assets of individual investors in this period grew by 23.1% while growth in AUM of institutional investors was more robust at 25.2%.

KEY TRENDS IN MUTUAL FUNDS – FOLIOS AND TICKET SIZES (FEBRUARY 2025)

Folios are investor accounts unique to an AMC and are a good barometer of retail intensity.

• There were total of 23.23 Crore folios as of the close of February 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 February 2025, the number of mutual fund folios have jumped from 3.95 Crore to 23.23 Crore. That is a jump of 488% in folios. Since Sep-14, folios have grown at CAGR (compounded annual growth rate) of 18.52%.
• 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 ₹64.53 Trillion is spread across 23.23 Crore folios, giving a per folio ticket size of ₹2.78 Lakhs.
• Unlike the popular perception, retail investors are not myopic in their approach to equity funds. As per data for February 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. While gross SIP flows are still robust, rising SIP stoppage is a concern.

KEY TRENDS IN MUTUAL FUNDS – GEOGRAPHICAL MIX (FEBRUARY 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 February 2025 with January 2025, T30 assets were down -0.33% at ₹55.34 Trillion. Total assets of B30 centres shrank by -2.24% to ₹12.24 Trillion. If we only look at the share of individuals; in February 2025, B30 cities accounted for 27.14% of individual assets while share of individuals in T-30 cities stood at 72.86%.
• 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.

Like in January, even February 2025 has seen continuation of the bias in favour of debt over equities.