The Indian mutual fund industry, which has seen seven-fold growth in assets under management (AUM) in the last ten years, is on track to achieve ₹100 lakh crore AUM milestone over the next few years, says Navneet Munot, Chairman of the Association of Mutual Funds in India (AMFI). The industry AUM has more than doubled from ₹24.5 lakh crore in July 2019 to a record ₹50 lakh crore mark in December 2023, while it stood at ₹67 lakh crore as of December 2024.

“Over the last 10 years, the MF industry's growth has been just phenomenal, and given the under-penetration, we expect the sector to continue to expand, both in terms of growth in the equity market and fund flows,” Munot told Fortune India at the sideline of an AMFI event in Delhi on January 25.

“It was a hard work of several decades, and now the industry is taking it to the next level, where we are trying to transform a nation of savers into a nation of investors,” adds AMFI Chairman.

Notably, India is fifth-largest economy by nominal GDP, but it ranks 17th in terms of mutual fund AUM in a country of over 1.4 billion people, indicating there is wide scope for penetration.

On Budget expectations of the MF industry, Munot says, “A more favorable outlook towards taxation on bond funds would be welcome to ensure that a larger number of Indians can secure their retirement. We have also developed a corporate bond market in India.”

Responding to a question on ongoing volatility in the equity market, the AMFI chairman said MF investors should continue to focus on their asset allocation and remain disciplined in investing. “We've always been maintaining that investors need to have long term orientation and remain invested for the long run; short term volatility is the nature of the market, and it would always exhibit this kind of trend. From time to time, over the last three or four years, we have never witnessed severe correction in the market, and investors expectations should not yet unreasonable.”

Navneet Munot, who is also MD and CEO of HDFC Asset Management, was speaking after a memorandum of understanding (MoU) was signed between the AMFI and the Asosiasi Manajer Investasi Indonesia (AMII), the Indonesian investment managers association, to boost bilateral relations between two countries in the investment management industry. The MoU was signed and exchanged between AMFI Chairman and Hanif Mantiq, Chairman of AMII and CEO of Star AM, Indonesia, in the presence of Amitabh Kant, Sherpa, G20 and Former CEO of NITI Aayog.

On the India-Indonesia partnership in the investment management industry, Munot says, “This is the first time AMFI has entered into a MoU with our counterpart in Indonesia. We will be sharing our best practices, which have led us to grow tremendously over the last 10 years. And I'm sure some of these landings will help the industry in Indonesia to grow a lot more over the next several years.”

“Also, a lot of global investors would like to participate in India's growth story. This was also about making Indonesian investors, through their association, aware of the growth in India's economy and prospects of its capital market,” he explained.

He said that this partnership aligns with the vision of Viksit Bharat 2047, set forth by Prime Minister Narendra Modi, and Indonesia’s goal of achieving a developed economy by 2045, marking 100 years of their independence. A strong capital market and a thriving asset management industry, as exemplified by the success of India’s mutual fund sector, will play a crucial role in achieving these milestones.

“This collaboration will lay the foundation for a sustainable and globally competitive mutual fund industry in both countries,” he adds.

The Indonesian mutual funds industry currently has an AUM of about $60 billion, while ours is about $800 billion. The MoU aims to create a platform for India and Indonesia to exchange best practices, insights, and strategies aimed at boosting the mutual fund industries. The partnership will cover understanding and need of broad spectrum of areas, including requirement for regulatory reforms, governance standards, essential investor protection steps, data analytics, research, product innovation, and risk management ensuring that both countries benefit from each other's expertise and experiences.