Small state emerges as fastest-growing mutual fund market in India; equity schemes dominate investor preference
Nagaland witnessed the highest year-on-year growth in mutual fund investments in India, with its Average Assets Under Management (AAUM) increasing by 100.57% as of June 2025, according to industry data analysed by Icra Analytics.
Despite its relatively small asset base, Nagaland outpaced all other states and union territories in terms of AAUM growth. The rise is seen as part of a larger trend where smaller and remote regions are showing increased participation in market-linked investments.
Among the top gainers, Dadra & Nagar Haveli recorded 56.52% growth, followed by Ladakh, which saw a strong month-on-month growth of 18.17%. While Maharashtra contributed the highest overall share of mutual fund assets at 40.61%, it is the smaller regions that reported the sharpest growth rates.
Equity-oriented schemes continued to dominate mutual fund assets nationally, contributing 54.76% of total AAUM. In Ladakh, equity schemes made up 90.85% of total assets, while in Lakshadweep they accounted for 84.07%.
Nagaland’s growth appears to be driven by increased retail participation, likely influenced by improved digital access, smartphone usage, and easier onboarding via fintech platforms. The data suggests that investors in the state are shifting from traditional instruments like fixed deposits toward equity-based investments for long-term wealth creation.
Across India, the mutual fund industry recorded 21.94% year-on-year growth and 3.61% month-on-month growth in AAUM in June 2025.
With over 65% of total mutual fund AAUM still coming from just five states—Maharashtra, Delhi, Gujarat, Karnataka, and West Bengal—the report say the mutual fund industry still has vast headroom for growth across India’s Tier-2, Tier-3, and rural regions.
(With inputs from Business standard)