The rise of India’s home-grown mutual fund investors, Pg7

Key Highlights:

• Domestic investors are keeping the Indian stock market afloat amidst Foreign Portfolio Investor (FPI) outflows.
• The share of Domestic Mutual Funds (DMFs) has reached a record high, while FPI ownership in NSE-listed companies has fallen to a 13.5-year low.
• Systematic Investment Plans (SIPs) are powering DMFs, with new accounts surging from 14.1 million in 2020-21 to 68 million in 2024-25.
• The proportion of household investment in mutual funds has increased from 0.9% in 2011-12 to 6% in 2022-23.
• The number of demat accounts across India rose by 200% between 2020 and 2024, reaching 11.8 crore.
• Investor participation is expanding beyond metros, with the share of AUM from the top eight cities dropping from over 80% in 2015 to 60% in March 2025.
• Women constitute approximately 25% of individual investors as of FY25.

Detailed Insights:

• Urban Indian men still dominate the domestic investor market, but the share of investors from smaller towns and non-metro areas is steadily increasing.
• FPIs still hold a larger share (17.3%) compared to DMFs (10.3%) among non-promoter shareholders in NSE-listed companies, highlighting the continued importance of FPIs.
• SIPs allow investors to invest a fixed amount regularly, as low as ₹1,000 monthly, and AUM through SIPs grew from ₹4.27 trillion to ₹13.35 trillion between 2020-21 and 2024-25.
• An RBI study indicates that access to the market via demat accounts, low fixed deposit rates, and a supportive business environment are key factors influencing investment in mutual funds.
• The growth in demat accounts was significant across all states/UTs, with Bihar experiencing over 400% growth and Uttar Pradesh seeing a 348% increase between 2020 and 2024.
• The concentration of mutual fund AUM in major cities is decreasing, indicating broader investor participation across different regions.
• The rise of domestic investors signifies increasing financial literacy and participation in the stock market, contributing to economic self-reliance.

Key Concepts Involved:

• Foreign Portfolio Investor (FPI): An entity that invests in the financial assets of a foreign country.
• Domestic Mutual Fund (DMF): Investment bodies within a country that pool money from shareholders and invest in the domestic financial market.
• Systematic Investment Plan (SIP): A method of investing a fixed sum of money regularly in a mutual fund scheme.
• Demat Account: An account to hold financial securities in electronic form.