Our is with this blog is to educate people about mutual fund industry and icici pru AMC ipo. we discussed some important information about mutual fund industry future.
AI GENRATED IMAGE
India is one of the fastest-growing economies in the world, driven by various factors such as demographic dividend, ongoing economic reforms, strong domestic demand, consistent GST collection, and focused effort on manufacturing, infrastructure, and digital transformations. Despite the global tensions, India’s economy has displayed remarkable growth.
For FY 2025, India’s growth is expected to grow at a rate of 6.5%, primarily because of the recovery in private consumption. This robust growth contributes to rising household income and savings in India, which in turn results in a boost in investment. Now, people are more willing to invest their money in the stock market or mutual funds. This mindset shift has helped the mutual fund industry grow from ₹10 lakh crore AUM in 2014 to ₹65 lakh crore AUM in November 2024, a 6x growth in 9 years. The combination of regulatory prodding and rising marketing ensured that mutual funds would become a strong pillar of the Indian economy.
Rising per capita income
is also supporting India’s economic growth. India’s per capita income is expected to grow in 2025 at 8.7%, reflecting India’s robust economic growth and also the efforts being made by the government to make India an upper-middle-income economy.
SOURCES:The mutual funds route to Viksit Bharat @2047
Yet even today, the growth potential in this industry is huge, and still, the penetration of mutual funds in India is very low. In India, there are 70 crore PAN holders, but just around 5 crore are mutual fund investors. And that count includes folios, not individuals. The actual number of individual investors is only 3.8 crore, which is barely 5% of the Indian population.
SOURCES:AMFI – Crisil Factbook 2024
The share of mutual funds in net savings of Indian households is constant. In India, the household savings are split between financial assets and physical assets, standing at 71.5% and 28.5% respectively as of March 2023. There was a clear change in how Indians are saving their money. Now, fewer people keep their money in savings accounts or as cash at home. Instead, more people are investing their money in the stock market, mutual funds, and buying life insurance.
This shows that people in India are becoming more aware of how to grow their money and manage it in better ways rather than just keeping it in a bank account or depositing it in a fixed deposit.
Growing Share of Equity Funds and Passive Funds in Overall AUM
Between March 2019 to March 2024, more and more people started investing their money in equity — meaning they are investing in the stock market. The share of money in equity grew from 29.4% to 44%. The total amount invested in equity grew from ₹7 lakh crore to ₹23.49 lakh crore. In fact, that’s a 2.3x growth in five years. This jump happened because people were investing more money in the market, and the market also gave a great rally.
Money in debt mutual funds, which invest investors’ money in safer asset classes like bonds and debentures, also grew — from ₹9.64 lakh crore to ₹12.62 lakh crore. However, their share in the mutual fund industry fell, as only a few investors now go for safe investment options in India.
Hybrid mutual funds, which invest money in both equity and debt, have also become more popular in recent years. In fact, this is considered a well-diversified fund in the market. The fund size also doubled from ₹3.36 lakh crore to ₹7.22 lakh crore.
The biggest growth happened in passive funds such as ETFs, which only follow the market and have very low expense charges. The size of these funds grew from 6.1% of the total industry to 17%, reaching ₹9 lakh crore. Even though this is a big jump, India is still far behind America, where 50% of mutual fund investments are in passive funds.
ICICI Prudential AMC IPO
At this point, one of India’s largest mutual fund houses has decided to launch an IPO — ICICI Prudential AMC. We don’t yet know the price at which they are issuing shares or the date. We only know that this is an offer for sale, meaning existing shareholders are selling their stakes.
The AMC business is currently at a peak. You take people’s money, invest that money, and charge a small fee — this is the simple business model of any Asset Management Company.
More than half of AUM comes from equity in the case of ICICI. Debt comes in second at 20%, around 8% is in liquid and overnight funds, and passive and other schemes make up another 15%.
We checked this because we wanted an understanding that ICICI manages 55% equity funds. Their expense ratio in regular funds is 1% to 2%, or in direct funds 0.5% to 1%. In debt funds, the expense ratio is 0.25% to 0.75%, and in passive funds, the expense ratio is 0.05% to 0.20%, which is very low because, in passive funds, fund managers only have to follow the benchmark — so the research involved is low. On the other hand, in equity funds, managers have to research thoroughly before investing client money in stocks.
Since ICICI has 55% of equity funds, it earns more from equity, and because the expense ratio is higher, the margin is really good. ICICI has better margins compared to peers.
How ICICI Pru AMC is Positioned Among Its Peers
According to CRISIL, ICICI Mutual Fund is a leader in actively managed funds. Their market share as of March 2025 is 13.3% in the active fund market. It also gets more money from retail investors, who pay extra fees compared to other market participants.
But there are also other big players in this industry, like SBI Mutual Fund. They manage money for the government or PSU companies, which is why their margins are slightly lower.
There’s also a difference in where these mutual funds get their customers from. ICICI Prudential has done a great job reaching investors through online platforms and also from smaller towns and rural areas.
The Risks for the Business
Sometimes, things are beyond control — like the economy, recession, or falling stock market. When markets go down, the money we manage also goes down. Because of this, we earn less, and the company generates lower revenue.
If our fund is not performing, then our other services like Portfolio Management Services (PMS), Alternative Investment Funds (AIFs), and Advisory Services also underperform.
This is an industry that depends heavily on fund managers. If a fund manager leaves the fund in the middle, that can also lead to underperformance of the fund.
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