Indian mutual fund industry sees 20% CAGR over a decade, outpaces US: Franklin Templeton
The Indian mutual fund (MF) industry has posted 20% compound annual growth rate (CAGR) in assets under management (AUM) over the last 10 years. This has outpaced the 8% CAGR seen in the US, according to a press note released by Franklin Templeton India Mutual Fund.
The industry’s AUM reached an all-time high of ₹72.2 lakh crore as of May 2025. Over the past year alone, the industry added ₹13.3 lakh crore in assets. In the last five years, AUM grew at a 24% CAGR, highlighting the sector’s rising prominence in India’s financial ecosystem.
Mutual funds outpace FPIs
Domestic mutual funds are offsetting foreign portfolio investor (FPI) activity. In the 12 months ending May 2025, domestic institutional investors (DIIs) recorded net inflows of ₹6 lakh crore, while FPIs saw net outflows of ₹3.1 lakh crore. This shift suggests that mutual funds are emerging as a strong counterbalance to volatile foreign flows.
AUM-to-deposit ratio triples
The MF industry’s share of total bank deposits has tripled over the past decade. The AUM-to-deposit ratio rose from 12.6% in 2015 to over 31% in May 2025.
Rise beyond metro cities
Investor interest in mutual funds is expanding beyond India’s top 15 cities. The share of AUM from B15 (beyond top 15) cities increased from 25% in March 2020 to 35% by March 2025. Similarly, B30 city contributions rose from 16% in December 2020 to 18% in May 2025.
State-wise AUM trends
Maharashtra, Delhi, Karnataka, and Gujarat remain the top contributors to industry AUM. However, Telangana (32.08%) and Haryana (27.90%) posted the highest annual average AUM (AAUM) growth in the past year.
Surge in retail participation
India’s investor base continues to grow steadily. The total investor count reached 5.49 crore in May 2025, with 3.19 lakh new investors added during the month. Over the past year, the industry onboarded 89 lakh new investors, up from 78 lakh in the previous year.
Sectoral and equity flows remain strong
Sectoral and thematic funds saw the highest gross and net sales in the last 12 months. Most equity categories recorded positive net inflows in May 2025, reflecting continued investor appetite for equity-linked products.