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Mutual fund folio growth: how the March 2024 story panned out

12 Apr 2024 , 10:16 AM


In March 2024, we saw intense outflows from mutual funds to the tune of ₹1.59 Trillion. This was led by ₹1.98 Trillion of net outflows from debt funds. It needs no reiteration that debt funds, especially at the short end of the yield curve, are dominated by treasuries of corporates, institutional investors and HNIs. Hence, while they do account for AUM growth, they are not too strong on folios growth; which is the actual narrative here. In fact, the contribution of debt fund folios to overall folios is just 4.03%. In contrast, equity fund folios account for 69.06% of the total folios, while hybrid funds and passive funds account for 10.88% and 15.72% of the overall folios respectively. The balance 0.32% is accounted for by the folios of close-ended funds in India.


One must remember that mutual fund folios have an important role to play. These mutual fund folios or MF accounts capture the retail intensity. The folios are not about unique investors since an investor will have a unique folio for each AMC. For example, out of the 17.79 Crore folios in India as of March 2024, only about 4.25 Crore investors are unique.. Having said that, the mutual fund folios are the best approximation of retail intensity that we have. One can argue that India has mutual fund penetration of just about 2.5%, compared to 46% in the US and 44% in Japan; but that is precisely where the opportunity for Indian mutual funds exists. Here we focus on how the folios have grown over the last one year (March 2023 to March 2024) across categories and sub-categories.


How does the macro picture for March 2024 for mutual fund folios look like across open-ended and close-ended funds?

Macro picture Total Folios Mar-24 Total Folios Mar-23 Folio Growth
Open ended Funds 17,72,92,450 14,52,03,038 22.10%
Closed Ended and Interval Funds 5,64,310 5,27,562 6.97%
Grand Total 17,78,56,760 14,57,30,600 22.04%

Data Source: AMFI

At a macro level, the total number of mutual fund folios as of March 2024 stood at 17.79 Crore folios, compared to 17.42 Crore folios as of February 2024, 16.96 Crore as of January 2024, and 16.48 Crore folios as of December 2023. On a yoy basis, over March 2023, total folios are up at a robust 22.04%, which is progressively better than the 20.76% in February 2024, 18.70% in January 2024, and 16.84% in December 2023. Improvement is consistent.

In short, the ratio of yoy folio accretion has been consistently improving over last 4 months. In the last few months, even the closed ended folios have shown growth on a yoy basis to the tune of 6.97% and that is due to surge in demand for fixed term plans (FTP), or FMPs as they are called. However, at a macro level, the close-ended folios are just about 0.32% of total mutual fund folios.


Debt fund folios had been under pressure in recent months. After 5 months of positive yoy folio growth, December 2023 saw negative folio growth of -0.10%. The contraction in folios  deepened in January 2024 to -0.29%, but improved to -0.26% in February 2024. After a gap of 3 months, the debt fund folios growth in March 2024 is back to being marginally in the positive. It has grown at just 0.07% on a yoy basis, but that is still music to the ears of debt fund investors, considering the redemption pressure in recent quarters.

Active Debt Funds Total Folios Mar-24 Total Folios Mar-23 Folio Growth
Overnight Fund 9,00,146 6,28,550 43.21%
Long Duration Fund 64,858 45,546 42.40%
Gilt Fund 1,86,552 1,76,253 5.84%
Money Market Fund 4,30,626 4,22,082 2.02%
Liquid Fund 17,82,854 17,73,500 0.53%
Ultra Short Duration Fund 6,33,208 6,33,103 0.02%
Dynamic Bond Fund 2,20,569 2,29,940 -4.08%
Medium to Long Duration Fund 1,00,915 1,06,926 -5.62%
Low Duration Fund 8,77,506 9,40,074 -6.66%
Floater Fund 2,15,735 2,36,780 -8.89%
Corporate Bond Fund 5,60,652 6,17,379 -9.19%
Medium Duration Fund 2,30,314 2,56,052 -10.05%
Short Duration Fund 4,56,155 5,07,214 -10.07%
Gilt Fund with 10 year constant duration 38,142 42,565 -10.39%
Banking and PSU Fund 2,57,714 2,97,318 -13.32%
Credit Risk Fund 2,08,971 2,46,438 -15.20%
Sub Total – Active Debt Funds 71,64,917 71,59,720 0.07%

Data Source: AMFI

What are the key takeaways from a yoy comparison of debt fund folios as of March 2024. Out of the 16 categories of debt funds available in India as per AMFI classification, 6 categories showed positive growth in folios, while the remaining 10 debt fund categories saw contraction in folios. The ratio of contracting folios to expanding folios had been static at 9:7 for 6 months up to November 2023. However, in December 2023 and January 2024, this ratio has worsened to 10:6; and in February 2024 it weakened to 12:4. In March, the ration of positive to negative debt fund folios growth is back to 10:6. The leader of the pack in terms of folio growth was Overnight fund folios, which grew 43.21% yoy, on a relatively large base. Long Duration Funds grew folios at 42.40%, albeit on a smaller base. Gilt funds and money market funds also saw positive folio growth of 5.84% and 2.02% respectively.

In terms of folio contraction, it was the same list of standard suspects putting pressure on folio growth? Contraction in folios was pronounced across credit risk funds, banking & PSU funds, gilt funds with 10-year duration, short duration funds, medium duration funds and corporate bond funds. The folios story shows a general aversion for longer duration bond funds and also for any sort of allocation discretion. Liquidity tightness has caused short term yields to stay high, which is giving a natural preference to the shorter yield end funds.


In contrast to debt funds, there was little ambivalence in the growth of equity fund folios in March 2024 as they added 2.45 Crore folios in the year, across categories. For equity funds, macro level folio expansion improved further to 24.96% in March 2024, compared to 23.50% in February 2024; 21.06% in January 2024, and 19.02% in December 2023. Equity fund folios accretion was the big story in March 2024.

Active Equity Funds Total Folios Mar-24 Total Folios Mar-23 Folio Growth
Small Cap Fund 1,90,28,082 1,08,99,311 74.58%
Multi Cap Fund 60,71,425 41,42,895 46.55%
Sectoral/Thematic Funds 1,82,48,179 1,31,75,494 38.50%
Value Fund/Contra Fund 61,78,068 46,66,901 32.38%
Mid Cap Fund 1,40,15,426 1,06,12,983 32.06%
Dividend Yield Fund 8,77,410 7,21,832 21.55%
Large & Mid Cap Fund 92,77,595 78,09,179 18.80%
Flexi Cap Fund 1,42,59,500 1,27,01,619 12.27%
ELSS 1,61,13,976 1,52,72,141 5.51%
Large Cap Fund 1,36,68,455 1,29,73,512 5.36%
Focused Fund 50,83,569 53,15,932 -4.37%
Sub Total – Active Equity Funds 12,28,21,685 9,82,91,799 24.96%

Data Source: AMFI

In March 2024, a total of 10 out of the 11 categories of equity funds as per AMFI classification saw accretion in folios. That is a strike rate of 91%; the same as last 4 months. The only equity fund category to see contraction in folios in March 2024 was focused funds, with folios shrinking by -4.37%. As usual, small cap funds and multi-cap funds topped the folio growth story. The small cap flows had turned negative in March, but that has not really impacted the folio growth of this category on a yoy basis.

The big growth stories in terms of equity fund folios were small cap funds at 74.58%, Multi-Cap funds at 46.55%, sectoral / thematic funds at 38.50%, value / contra funds at 32.38%, mid-cap funds at 32.06%, and dividend yield funds at 21.55%. Like in February, the rising valuations of mid and small cap funds has led to surge in folios of large cap funds and large & mid-cap funds. The other story is the dichotomy of multi-cap funds and flexi-cap funds. Clearly, retail investors prefer allocation focus in combination funds and rule-based asset allocation funds rather than offering absolute discretion to the fund manager. Equity fund folios growth at 24.96% in March 2024; indicating that AUM growth is backed by folios too.


We have combined hybrid funds and solution-based funds for a more realistic picture of hybrids. Folios have grown across categories with 100% strike rate of positive folio growth. Apart from multi-asset allocation funds, equity savings funds and arbitrage funds also saw sharp growth in folios in FY24.

Hybrid / Solution Funds Total Folios Mar-24 Total Folios Mar-23 Folio Growth
Multi Asset Allocation Fund 20,24,071 10,53,181 92.19%
Equity Savings Fund 4,09,279 3,61,815 13.12%
Arbitrage Fund 4,91,203 4,45,949 10.15%
Retirement Fund 28,65,115 27,59,419 3.83%
Dynamic Asset Allocation / BAF 46,15,533 44,47,644 3.77%
Conservative Hybrid Fund 5,37,555 5,19,049 3.57%
Childrens Fund 29,83,777 29,27,533 1.92%
Balanced Hybrid Fund 54,16,765 53,17,925 1.86%
Sub Total – Hybrid Funds 1,93,43,298 1,78,32,515 8.47%

Data Source: AMFI

All the 8 categories of hybrid funds saw folio expansion in March 2024; also 5 out of these 8 only reported single-digit growth in folios. The best folio growth was seen, as usual, in multi asset allocation funds at 92.19% and this comes on an expanded base. The other segment of equity savings funds also saw investors growing folios by 13.12% yoy. Investors are now looking at select hybrids with multiple asset combinations as engines of asset allocation. If you look at the two categories of funds with the best folio growth in March 2024; multi-asset allocation funds and equity savings funds are asset allocation funds. Investors prefer rule-based asset allocation approach, with a wider mix of equity, debt, commodities, REITs, and derivative asset classes.

Other than the multi asset allocation funds, equity savings funds and arbitrage funds; all the other categories of hybrids only showed single digit growth. Balanced Advantage Funds (BAFs), which enjoys the highest AUM among hybrid funds, faltered in folio growth, in the absence of NFOs. For hybrid category of funds, number of folios grew 8.47% in March 2024, compared to 7.43% in February 2024; 6.61% in January 2024, and 5.45% in December 2023.


Passive funds may not have set the markets on fire in terms of folios growth like the active equity funds, but they have still added 60.44 Lakh folios in FY24, which is a substantial contribution to the expansion of the retail cult in India. Passive category includes equity and debt related index products, apart from gold funds and Fund of Funds (FOF). These are passive products; either benchmarked to an underlying index or a commodity asset class. Here is the story of how folios of passive funds grew in India in FY24.

Passive Funds Total Folios Mar-24 Total Folios Mar-23 Folio Growth
Index Funds 75,76,546 38,53,245 96.63%
Fund of funds investing overseas 15,57,288 13,02,024 19.61%
Other ETFs 1,37,67,925 1,20,64,198 14.12%
GOLD ETF 50,60,791 46,99,537 7.69%
Sub Total – Passive Funds 2,79,62,550 2,19,19,004 27.57%

Data Source: AMFI

Other than hybrid funds, even passive funds saw expansion in number of folios across all the categories. Passive fund folios gained in the last one year from targeted NFOs and a general preference for beta over alpha. This is true on the equity and debt side. The Index funds dominated folio growth at 96.63%, followed by international FOFs at 19.61%. Index ETFs at 14.12%, and Gold ETFs at 7.69%.

Passive fund folio growth, on yoy basis, improved to 27.57% in March 2024, compared to 26.68% in February 2024, 24.73% in January 2024 and 22.47% in December 2023. To cut a long story short, folio growth continues to remind us that Indian equity markets are becoming inclusive and this includes the passive fund story also. Folio growth may not be precise but is, perhaps, the best approximation of retail participation and intensity in the mutual fund market. Folio growth is special because it is not just about big investors, but about the financial inclusion of millions of small investors. That is why, folio growth holds the key to sustained expansion of mutual funds as an asset class in India; both in terms of flows and wallet share.

Related Tags

  • AUM
  • GoldETF
  • IndexETF
  • IndexFunds
  • MFs
  • MutualFunds
  • PassiveFunds
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