Current Scenario
The Indian mutual fund industry has experienced explosive growth over the last twenty years, a testament to the nation’s evolving financial landscape. From a modest ₹1.56 lakh crore in June 2004, the industry’s Assets Under Management (AUM) has soared to an impressive ₹61.16 lakh crore by June 2024. This remarkable expansion is fueled by a combination of increased financial literacy, leading to greater awareness of mutual funds, and a significant rise in disposable incomes among the Indian population, allowing for increased investment opportunities.
While the Indian mutual fund industry has seen impressive growth, much of which is attributable to the crucial role of mutual fund distributors, significant potential remains untapped. Despite the surge in Assets Under Management, penetration within India’s vast population remains low, with only a small fraction participating. Furthermore, India’s AUM-to-GDP ratio, a mere 16%, starkly contrasts with global averages and leading economies, indicating a considerable gap. This disparity underscores that while the industry has made strides, it is still in its nascent stage, with a long and promising journey ahead to achieve its full potential.
Performance of Mutual Funds (SIP)
Over the past 25 years, consistent investment through a Systematic Investment Plan (SIP) in equity mutual funds has demonstrated remarkable resilience and growth. A hypothetical monthly SIP of ₹10,000, spread equally across all available equity schemes, would have yielded an impressive ₹4.19 crore today, representing a 17.57% annualized return. This performance is particularly noteworthy considering the numerous market fluctuations, including the dot-com bubble, the 2008 financial crisis, and the recent pandemic. Even the worst-performing equity scheme during this period would have delivered a robust 11.78% return, significantly outperforming traditional fixed deposits. This illustrates the power of disciplined, long-term SIP investing in navigating market volatility and generating substantial wealth.

History of Mutual Funds in India.
The Indian mutual fund industry has experienced remarkable growth since its inception. In 1963, the government established the Unit Trust of India, laying the foundation for pooled investments with the pioneering “Unit Scheme 64.” The industry’s transformation accelerated in 1992 with the establishment of SEBI, followed by the landmark decision in 1993 to open the sector to private players, both domestic and foreign. Today, with approximately 44 asset management companies offering diverse investment products, the industry stands as a testament to its success. As of June 2024, the total Assets Under Management (AUM) reached an impressive ₹61.16 lakh crore, a significant leap from ₹9.75 lakh crore in June 2014, reflecting the growing confidence and participation of Indian investors in the capital market.
A Systematic Investment Plan (SIP) in equity mutual funds is a smart and disciplined way to build long-term wealth by investing a fixed amount at regular intervals. With a minimum investment as low as ₹100, SIPs have become a popular choice for retail investors in India, enabling them to save and invest effortlessly. Over the past 25 years, SIPs have demonstrated the power of compounding, multiplying wealth by 13.98 times. The monthly live SIP contribution has surged from ₹7,554 crore in June 2018 to ₹25,999 crore in Feb 2025. By investing consistently, individuals can fulfill essential financial goals such as buying a home, funding education, and planning for retirement. The magic of SIP lies in its ability to turn small, regular investments into substantial financial gains over time, reinforcing Albert Einstein’s famous quote, “Compound interest is the 8th wonder of the world.”

Performance of mutual funds lumpsum  
Investing in mutual funds through a lumpsum approach has proven to be a powerful wealth-building strategy over the past 25 years. An investment of ₹1 lakh in diversified equity mutual funds in June 1999 would have grown to ₹69.73 lakh by June 2024, delivering an impressive, annualized return of 18.50%. More than 71.79% of mutual fund schemes have generated returns exceeding 15%, with the best-performing scheme achieving a staggering 23.92% return. The key to maximizing wealth through mutual funds lies in disciplined investing, selecting the right asset class, and staying invested for the long term to harness the power of compounding.

Milestones of the Indian Mutual Fund Industry

1964: The Unit Trust of India (UTI) introduced ‘Unit Scheme 64,’ marking the launch of India’s first mutual fund scheme.

1987: The government permitted public sector entities (excluding UTI) to enter the mutual fund industry.

1993: Private sector companies were given approval to participate in the mutual fund sector, expanding the industry.

2014: In May, the total Assets Under Management (AUM) in mutual funds exceeded ₹10 lakh crore for the first time.

2017: In August, mutual fund AUM crossed ₹20 lakh crore, reflecting significant industry growth.

2024: As of June, the number of mutual fund folios surged to 19.10 crore, while AUM reached ₹61.16 lakh crore.