Indias small states are lean, mean and mutual fund-hungry, says ICRA report

Kolkata: Call it small base effect or sheer hunger for instruments that generate inflation-beating returns, the small states of the country are generating Usain Bolt like pace when it comes to investments in mutual fund schemes, data crunching by ICRA Analytics has shown. The growth rates of Average Assets Under Management has reached a blistering pace in some of the small states as Nagaland, Dadra & Nagar Haveli, Mizoram, Ladakh and Lakshadweep.

According to the report, the growth in Nagaland reached an astounding pace of 100.57% (year-on-year), while Dadra & Nagar Haveli came second at 56.52% (also year-on-year). The third place in growth rates was occupied by Mizoram with 47.52%. The month-on-month growth rates (June over May 2025) for Ladakh was quoted at 18.17%, while that of Lakshadweep was at 19.18%.

Of the major states, the pecking order was more or less predictable. Maharashtra, the economic powerhouse continued it dominance, cornering a humongous 40.61% of the industry's AUM. The other major states were Delhi, Gujarat, Karnataka, and West Bengal. Together they cornered more than 65% of the assets under management. Each of tehse four states account for less than 10% of the AUM of the industry.

Nilanjan Dey, director, Wishlist Capital saw a silver lining in the skewed distribution of mutual fund investors in the country. "These figures tell you that there is immense possibility of growth in many states which augur well for an industry which is standing before an ocean of possibilities. In fact, even in each of the five major states, the mutual fund industry has a big untapped market, Just imagine where the market will expand if the smaller towns in different states and rural regions come forward to adopt mutual funds," Dey told TV9.

The galloping pace of mutual fund adoption in the small states is also proof of the fact that retail investors are taking the help of internet, smartphones and digital platforms to invest in equity schemes to participate in the growth story of the capital market. The equity schemes have remained the turboprop engines of the mutual fund industry. As a category they account for 54.76% of the total AAUM. Debt-oriented schemes and liquid schemes came a poor second and third, accounting for 14.88% and 12.50% of the industry.

On the other hand, according to the June monthly report of AMFI, the Indian MF industry's AUM surpassed Rs 74 lakh crore and the SIP inflows hit Rs 27,269 crore -- both registering new highs. The third high was the number of contributing SIP accounts which reached 8.64 crore, which is higher than the total population of Germany.