AUM categorisation

AUM categorisation refers to the bucketing of mutual fund schemes by Assets Under Management (AUM) size, used by AMFI, industry analysts, and investors for comparative analysis, risk assessment, and capability evaluation. Indian mutual fund schemes span from small newly-launched schemes (~Rs 100 crore AUM) to flagship schemes managing Rs 50,000+ crore. The size band influences scheme behaviour, liquidity, manager flexibility, and operational characteristics.

For Indian retail investors, AUM size is a meaningful but not decisive factor in scheme selection. Larger schemes are not inherently superior, but size correlates with:

• Operational stability.
• Lower TER (driven by SEBI’s TER regulation slabs ).
• Lower idiosyncratic stock-pick risk.
• But also reduced manager flexibility on small / illiquid positions.

Typical AUM bands

The Indian mutual fund industry’s per-scheme AUM distribution clusters around recognisable bands:

Relationship with SEBI TER slabs

Per SEBI TER regulation slabs , TER caps decline as AUM rises:

So larger schemes structurally offer lower TER, advantaging cost-efficient investors.

Scheme-size implications

Mega-scheme advantages

For investors:

• Lower TER drives higher net returns.
• Stable scheme operations (won’t fold).
• Strong RTA / custodian / distribution support.
• Liquid in stressed redemption scenarios.

Disadvantages:

• Reduced manager flexibility (can’t take meaningful small-cap positions).
• Performance often hugs benchmark (large-cap flagship funds are often closet-indexers).
• May underperform smaller, more concentrated schemes in bull cycles.

Mid-tier scheme position

• Sufficient scale for operational stability.
• Manager retains flexibility for active positioning.
• Often the sweet spot for performance-seeking investors.

Small-tier risks

• Smaller AUM may force closure if it doesn’t reach viable scale.
• Less operational depth.
• TER may be at maximum slab.

AUM and scheme strategy

Size constraints by category

Some scheme categories have natural AUM ceilings beyond which performance degrades:

• Small-cap funds: Beyond Rs 5,000 to 8,000 crore, executing meaningful small-cap positions becomes difficult. Many AMCs cap subscriptions to small-cap funds at this scale.
• Mid-cap funds: Beyond Rs 10,000 to 15,000 crore, similar liquidity constraints.
• Large-cap funds: Can scale to Rs 50,000+ crore without major constraint.
• Liquid / debt funds: Can scale to Rs 50,000+ crore as the underlying market is deeper.

Subscription closures

When AMCs determine a scheme has reached optimal capacity:

• Subscription closure: AMC stops accepting new subscriptions / SIPs.
• Lump-sum stop: Subscriptions through lump-sum stopped; SIPs continue.
• SIP closure: Even SIPs stopped (rare).

This protects existing investors from capacity-driven performance dilution.

AUM monitoring

AMFI monthly AUM data

Per AMFI monthly AUM data :

• Industry-wide AUM published monthly.
• Per-AMC and per-scheme AUM available.
• Investors can track AUM evolution over time.

AMC-level AUM categorisation

Investor decision

When evaluating a scheme:

• AUM size is one factor, not the only factor.
• Check AUM stability over time (consistent growth vs erratic).
• Check AUM trajectory relative to category (gaining or losing share).
• For small-cap / mid-cap, prefer mid-AUM schemes for execution flexibility.
• For large-cap, mega-scheme TER advantage often wins.

See also

• Mutual funds in India
• Total Expense Ratio (TER)
• TER regulation and slabs
• Direct vs Regular TER
• Large-cap mutual fund India
• Mid-cap mutual fund India
• Small-cap mutual fund India
• AMFI
• AMFI monthly AUM data
• AMFI AAUM data
• AMFI industry composition
• T30/B30 categorisation
• SEBI October 2017 categorisation
• Revamped factsheet 2024
• SEBI

External references

• AMFI India
• SEBI

References

1. SEBI master circular on TER and AUM-based slab regulation.
2. AMFI monthly AUM publication.
3. AMFI Best Practice Guidelines.