SBI Mutual Fund AUM around 20% of country's at over Rs 10 lakh cr

SBI is not only the largest government bank in the country but also the largest mutual fund house. SBI Mutual Fund’s assets under management (AUM) have crossed 10 lakh crore rupees, achieving the milestone of being the first asset management company (AMC) in the country to do so.

Assets under management (AUM) refer to the total market value of investments managed by an AMC. It indicates how much money investors have invested in that fund. According to the Association of Mutual Funds in India (AMFI), as of the end of April, the AUM of mutual funds had crossed 57 lakh crore rupees. The number of unique investors has increased from two crores to 4.5 crores in March 2020. Unique investors refer to the number of individuals and institutions investing in mutual funds.

Since COVID-19 pandemic, there has been a rapid increase in investors’ interest in mutual funds in the country. By the end of March 2020, SBI Mutual Fund had become the largest AMC in the country with an AUM of 3.7 lakh crore rupees. For the past three financial years, the growth of this company’s AUM has been above the industry average. During the last four years, the AUM of the mutual fund industry has grown 2.6 times, crossing 57 lakh crore rupees. During this period, the number of mutual fund accounts, or folios, has reached 18.15 crores.

Systematic Investment Plan (SIP) plays a significant role in the AUM of mutual funds. Out of the total folios in mutual funds, there are 8.7 crore folios of SIPs, with a fund of 11.26 lakh crore rupees. SBI holds nearly 20% of the total AUM in the mutual fund industry.

The increase in AUM indicates growing trust among investors. The question arises as to how SBI’s AUM is increasing and how it should be viewed from different perspectives. SEBI-registered investment advisor Jitendra Solanki says that SBI Mutual Fund has been performing well in debt and equity-related schemes for many years. The Employees’ Provident Fund Organization (EPFO) has invested a significant portion of its retirement fund in SBI’s mutual funds. Additionally, there has been good growth in the stock market, contributing to SBI’s increasing AUM.

However, a large AUM is not always positive for a fund house. Often, managing a large amount of money poses a significant challenge to fund houses. A large AUM indicates that more people are investing in that fund, but it does not necessarily mean that a large AUM guarantees higher returns. Similarly, if a fund’s size is small, it does not mean that it will offer lower returns or investors should not invest in it. If you are not well-versed in mutual funds, it’s advisable to seek advice from a financial advisor before investing.