How the Indian states stacked up on mutual fund AUM

16 Mar 2023 , 11:29 AM

If you were to do an AUM ranking of Indian states, the obvious cynical response would be, “Oh Maharashtra is going to be at the top.” That is bound to happen, since Mumbai happens to be the epicenter of the Indian financial markets. Also, the large base that Mumbai has of banks, insurance companies, corporates and high net worth individuals would ensure that Mumbai in particular and Maharashtra in general will dominate the mutual fund state-wise AUM rankings. However, that would also risk missing out on critical trends that are emerging from elsewhere. Here is the mutual fund AUM story.

How Indian states stacked up on total mutual fund AUM?

The table captures the top 10 Indian states in terms of total mutual fund AUM across all fund categories.

Name of the State /  Union Territory	Total Mutual Fund AUM (Rs in crore)
Maharashtra	17,01,890
New Delhi	3,45,690
Karnataka	2,81,217
Gujarat	2,79,410
West Bengal	2,12,786
Tamil Nadu	1,78,753
Uttar Pradesh	1,77,086
Haryana	1,66,848
Others	1,50,315
Rajasthan	70,630
Total AUM as of February 2023	40,68,800

Data Source: AMFI

Maharashtra is clearly in the lead with 41.8% of the all-India AUM. But that still means that nearly 60% of the mutual fund AUM comes from outside Maharashtra. Even if you leave out Maharashtra, there are 4 states with AUM of above Rs2 trillion and 7 states with AUM above Rs1 trillion. With fund houses just about starting their focus on smaller states and cities, this ratio of other states in the overall AUM is only going to increase from here.

How Indian states stacked up on Liquid Funds AUM?

Here we capture the top 10 states in India in terms of liquid fund AUM largely in the very short-term and overnight category.

Name of the State /  Union Territory	Liquid Fund AUM (Rs in crore)
Maharashtra	3,70,621
New Delhi	68,700
Karnataka	47,415
Gujarat	35,284
Tamil Nadu	34,555
Haryana	23,059
West Bengal	22,952
Uttar Pradesh	9,986
Telangana	8,357
Others	7,225
Total Liquid Fund AUM (Feb-23)	6,64,489

Data Source: AMFI

Here again, the domination of Maharashtra is hardly surprising. In fact, it accounts for 55.8% the total AUM. The reason being that liquid fund investments are a part of treasury management and most of the large corporate treasuries and bank and institutional treasuries are based out of Mumbai. This gives them an obvious advantage in AUM. However, other industrialized and business friendly states like New Delhi, Karnataka, Gujarat, and Tamil Nadu are also gathering steam.

How Indian states stacked up on Debt Fund AUM?

Here are the 10 Indian states in terms of the AUM of longer period debt / income funds with a predominantly corporate and HNI customer base.

Name of the State /  Union Territory	Total Debt Fund AUM (Rs in crore)
Maharashtra	2,78,904
New Delhi	79,982
Haryana	74,235
Karnataka	65,000
Gujarat	60,269
West Bengal	46,098
Tamil Nadu	38,051
Uttar Pradesh	29,644
Others	21,183
Telangana	11,792
Total Debt Fund AUM (Feb-23)	7,81,863

Data Source: AMFI

Unlike other categories, the share of Maharashtra in overall debt funds is just about 35.7%, despite the strong presence of HNIs, institutions  and corporates. You find a strong leadership in debt fund AUM coming from New Delhi, Haryana, and Karnataka. Of course, Haryana can be attributed to the presence of Gurugram, which is one of the major contributors to mutual fund AUM in India from retail and from corporates.

How Indian states stacked up on Growth (equity) Fund AUM?

The table captures the top 10 states in India in terms of total growth (equity) fund AUM across all fund categories, including the equity component of balanced schemes.

Name of the State /  Union Territory	Total Growth Fund AUM (Rs in crore)
Maharashtra	5,42,053
Gujarat	1,55,266
New Delhi	1,47,052
Karnataka	1,46,165
Uttar Pradesh	1,19,351
West Bengal	1,11,796
Others	99,080
Tamil Nadu	90,448
Haryana	60,846
Rajasthan	48,198
Total Growth Fund AUM (Feb-23)	18,47,061

Data Source: AMFI

This table shows you eloquently how the equity cult has spread across more states in India. Maharashtra has just about 29.3% of the growth / equity fund AUM; much lower than the average for debt funds or even for overall AUM. Not surprisingly, Gujarat emerges at second place, a clear indication that when it comes to investment, people of Gujarat still prefer active equity investing (either directly or indirectly). What is also interesting is that apart from Maharashtra, there are 5 more states with equity fund AUM of over Rs1 trillion.

How Indian states stacked up on Index ETF AUM?

The table captures the ranking of the top 10 states in India in terms of passive or index ETF based mutual fund AUM. Of course, these include equity and debt indices.

Name of the State /  Union Territory	Total Index ETF AUM (Rs in crore)
Maharashtra	4,18,422
New Delhi	35,018
West Bengal	7,548
Others	6,676
Karnataka	4,851
Gujarat	4,288
Tamil Nadu	3,116
Haryana	2,721
Uttar Pradesh	1,928
Jharkhand	1,534
Total Index ETF AUM (Feb-23)	491,600

Data Source: AMFI

With a total AUM of Rs4.91 trillion, index ETFs are the single largest category of mutual funds in terms of AUM. One argument is that there are no restrictions on an AMC for launching any number of index funds, but that is not the full story. In reality, India like the rest of the world, is also seeing a gradual shift from active investing to passive investing. As market efficiencies make it harder to get alpha, index funds are only likely to pick up. Maharashtra accounts for a whopping 85.1% of the AUM of index ETFs in India, but that is largely due to the strong presence of institutions, corporates and HNIs in this space. Also, it is still to take off and the education is still limited in this area. For now, Gujarat is still showing a preference for active investing over passive investing.

How Indian states stacked up on Gold ETF AUM?

The table captures the top 10 states in India in terms of gold ETF AUM where the AUM growth has not kept pace with the growth in folios.

Name of the State /  Union Territory	Total Gold ETF AUM (Rs in crore)
Maharashtra	17,463
Karnataka	858
Tamil Nadu	627
Others	578
New Delhi	397
Gujarat	299
Telangana	236
West Bengal	232
Uttar Pradesh	207
Goa	118
Total Gold ETF AUM (Feb-23)	21,714

Data Source: AMFI

At $21.7 billion, one can argue that the AUM is too small to really matter, but this is a good test of the appetite of non-physical gold in India. While Maharashtra dominates, it appears that Southern states like Karnataka and Tamil Nadu are more open to the concept of non-physical gold while in most of the other places, it is still physical gold that is the first port of call. The reach of gold ETFs needs to improve to give us more conclusive evidence.

Last word: what are the major takeaways

Mumbai and Maharashtra are clearly in the lead when it comes to mutual fund AUM, but the good news is that the equity cult has spread rapidly to a number of other states. The combination of mobile trading and user friendly apps has made equities a lot more accessible, as have easier KYC requirements. Above all, the rise of the millennials has also made mutual funds a preferred access point to financial markets. Things should get much better for the smaller states in the months to come.