A mutual fund is a pooled investment vehicle managed by an asset management company (AMC). It collects money from multiple investors and invests in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are designed to cater to diverse investment objectives, offering options for capital appreciation, income generation, or wealth preservation.
Key Features of Mutual Funds
- Professional Management: Mutual funds are managed by experienced fund managers who make investment decisions based on market research and analysis.
- Diversification: Mutual funds reduce risk by spreading investments across various asset classes, sectors, and geographies.
- Liquidity: Most mutual funds offer high liquidity, allowing investors to redeem their units on any business day.
- Affordability: Investors can start investing with a small amount through Systematic Investment Plans (SIPs).
- Transparency: SEBI regulations ensure that AMCs provide regular updates on portfolio holdings and performance.
- Flexibility: Options like growth, dividend, and reinvestment plans allow customization based on investor needs.
Regulation: Mutual funds in India are regulated by the Securities and Exchange Board of India (SEBI), ensuring safety and compliance.
Journey of Mutual Funds in India
- 1963: Unit Trust of India (UTI) launched, marking the beginning of mutual funds in India.
- 1987: Entry of public sector mutual funds like SBI Mutual Fund and Canara Robeco Mutual Fund.
- 1993: Private sector participation introduced, leading to greater competition and innovation.
- 1996: SEBI introduced regulations for the mutual fund industry, enhancing investor protection.
- 2000s: Rise of equity-oriented funds and SIPs as popular investment modes.
Present: Over 40 AMCs operate in India, offering diverse schemes tailored to various investor profiles.
Total Asset Management Companies (AMCs) in India
As of January 2025, there are 44 SEBI-registered AMCs in India. Some notable ones include:
- SBI Mutual Fund
- HDFC Mutual Fund
- ICICI Prudential Mutual Fund
- Axis Mutual Fund
- Nippon India Mutual Fund
Total Fund Size of the Indian Mutual Fund Industry
As of December 2024, the Indian mutual fund industry’s total Assets Under Management (AUM) stands at ₹47 lakh crore (47 trillion INR). This makes it one of the fastest-growing mutual fund industries globally.
Types of Mutual Funds
- By Structure:
- Open-Ended Funds: Freely buy and sell units anytime.
- Close-Ended Funds: Fixed maturity period, tradable on stock exchanges.
- Interval Funds: Hybrid of open-ended and close-ended funds.
- By Investment Objective:
- Equity Funds: Invest in stocks for long-term capital appreciation.
- Debt Funds: Focus on fixed-income securities like bonds and debentures.
- Hybrid Funds: Combine equity and debt for balanced returns.
- Index Funds: Track a specific index like Nifty 50 or Sensex.
- ELSS (Equity Linked Savings Scheme): Offer tax benefits under Section 80C.
- By Specialty:
- Sectoral Funds: Focus on specific industries like IT or healthcare.
- Thematic Funds: Invest based on broader themes like ESG (Environmental, Social, and Governance).
International Funds: Provide exposure to global markets.
Top Ranked Mutual Funds (by AUM)
- SBI Mutual Fund – AUM: ₹7.5 lakh crore
- HDFC Mutual Fund – AUM: ₹5.2 lakh crore
- ICICI Prudential Mutual Fund – AUM: ₹4.8 lakh crore
- Nippon India Mutual Fund – AUM: ₹2.9 lakh crore
Axis Mutual Fund – AUM: ₹2.7 lakh crore
Top Mutual Fund Schemes by Category (with 3-Year and 5-Year Returns)
- Large-Cap Funds:
Fund Name | 3-Year Return (%) | 5-Year Return (%) |
SBI Bluechip Fund | 18.2 | 14.5 |
ICICI Prudential Bluechip Fund | 17.6 | 15.0 |
HDFC Top 100 Fund | 16.9 | 14.2 |
Axis Bluechip Fund | 18.0 | 14.8 |
Mirae Asset Large Cap Fund | 19.3 | 15.2 |
- Mid-Cap Funds:
Fund Name | 3-Year Return (%) | 5-Year Return (%) |
Axis Midcap Fund | 22.1 | 18.7 |
Kotak Emerging Equity Fund | 21.5 | 17.5 |
Nippon India Growth Fund | 20.8 | 18.1 |
HDFC Mid-Cap Opportunities Fund | 20.5 | 17.8 |
DSP Midcap Fund | 21.0 | 18.0 |
- Small-Cap Funds:
Fund Name | 3-Year Return (%) | 5-Year Return (%) |
SBI Small Cap Fund | 25.6 | 20.4 |
Axis Small Cap Fund | 24.8 | 19.5 |
Kotak Small Cap Fund | 25.0 | 20.1 |
Nippon India Small Cap Fund | 26.0 | 21.0 |
HDFC Small Cap Fund | 25.2 | 20.2 |
- Multi-Cap Funds:
Fund Name | 3-Year Return (%) | 5-Year Return (%) |
Parag Parikh Flexi Cap Fund | 19.5 | 16.0 |
UTI Flexi Cap Fund | 18.7 | 15.4 |
Kotak Flexi Cap Fund | 18.9 | 15.6 |
SBI Multi Cap Fund | 19.2 | 16.2 |
HDFC Flexi Cap Fund | 18.8 | 15.5 |
- Sectoral Funds:
Fund Name | 3-Year Return (%) | 5-Year Return (%) |
ICICI Prudential Technology Fund | 32.0 | 25.5 |
SBI Healthcare Opportunities Fund | 28.7 | 22.1 |
Nippon India Banking Fund | 24.5 | 19.7 |
Tata Digital India Fund | 30.2 | 24.8 |
Aditya Birla Sun Life Pharma Fund | 27.3 | 21.5 |
- ELSS Funds:
Fund Name | 3-Year Return (%) | 5-Year Return (%) |
Axis Long Term Equity Fund | 17.8 | 14.7 |
Mirae Asset Tax Saver Fund | 18.3 | 15.3 |
Canara Robeco Equity Tax Saver Fund | 18.0 | 15.1 |
DSP Tax Saver Fund | 17.6 | 14.8 |
HDFC Tax Saver Fund | 17.5 | 14.6 |
Specialized Investment Funds: A New SEBI Initiative
To cater to high-net-worth individuals and sophisticated investors, SEBI has introduced Specialized Investment Funds with the following features:
- Eligibility Criteria: Investors must meet minimum income or net worth thresholds as defined by SEBI.
- Minimum Investment Amount: ₹10 lakh per investor.
- Focus Areas: These funds invest in niche markets such as alternative assets, infrastructure projects, or distressed assets.
- Lock-In Period: Typically longer than traditional mutual funds, ranging from 5 to 10 years.
Risk Profile: Higher risk due to targeted investment strategies and less liquidity.
Total SIP Book Size
Systematic Investment Plans (SIPs) have become a preferred mode of investing due to affordability and disciplined investing. The SIP book size in India stands at ₹ 25,000 crore per month, with over 10 ** crore active SIP accounts**.
Benefits of Mutual Funds
- Tax Efficiency: Options like ELSS provide tax deductions under Section 80C.
- Convenience: Easy to invest, redeem, and track online.
- Market Access: Access to diverse asset classes without needing large capital.
Tailored Solutions: Different funds for various risk appetites and goals.
