Mutual funds are an exceptional tool for investment. The MF industry is turning out to be the fastest growing and most competitive segment of India’s financial sector, offering operational flexibility and attractive returns to investors (RBI, 2017). Compound annual growth rate (CAGR) of AUM of mutual funds in India has grown to 25 percent over the last five years (2013-2018). Matured financial market stimulates household savings. The transparency in operations due to SEBI, liberal foreign capital norms have resulted in the growth of mutual funds.. This article attempts to analyze recent developments in the industry, i.e., up to end-March 2018, with growing formalization and financialization of the Indian economy. The AUM has grown from INR 4.13 trillion in 2008 to INR 22.86 trillion in 2018 about 5.5 fold increases because of the contribution of the private and foreign players in the domestic market. MFs’ investment in equities stood at INR 8.9 trillion at end-March 2018, which accounted for 6.2 percent of market capitalization of the BSE listed companies.

Keywords: Mutual funds, AUM, CAGR, SEBI, AMFI, Financial Stability, Financial System.