Mutual Funds Surge in Small States: Nagaland, Mizoram Lead

According to the analysis by ICRA Analytics on the latest industry data, the domestic mutual fund industry continued to grow in July 20254, with a rise in the AAUM (Average Assets Under Management) of 19.01% YoY (year-on-year) and 2.96% MoM (month-on-month). Various categories contributed to the growth in average AUM in 2025, but the biggest contribution was from equity schemes.

Equity Schemes Lead the Pack

Equity Mutual Fund schemes maintained their position as the top contributor, with 54.56% of total AAUM, followed by liquid schemes at 14.64% and debt schemes at 13.20%.

Ladakh topped the investment charts with equity mutual funds hitting 90.95% and Lakshadweep not too far behind at 83.55%.

Also Read: How To Calculate Rolling Returns In Mutual Funds?

Maharashtra Still Leads the Pack

Maharashtra still rules when it comes to Mutual Fund investments, holding 40.64% of the Average Assets Under Management. New Delhi, Gujarat, Karnataka, and West Bengal are next in line.

The top 5 states hold over 67% of all AAUM, mostly in significant financial and metro cities.

Fast Growth of Smaller States

Smaller states and territories did better than the bigger states this month. Mizoram shot up 11.94%, followed by Dadra & Nagar Haveli at 5.90% and Kerala at 5.06%.

However, Nagaland was the standout performer annually with an 84.43% rise in AAUM, while Dadra & Nagar Haveli also clocked a strong 45.99% YoY growth.

A Rare Decline in Lakshadweep

In July 2025, Lakshadweep was the only territory that faced a downfall in the investments of mutual funds, with a AAUM of 41.82% YoY. Goa registered the slowest positive growth at 12.42% YoY.

Also Read: What is Risk in Mutual Fund and Its Types?

What Investors Should Consider

The growth of mutual funds confirms three key trends for retail and institutional investors:

Rising interest in equities - more investors are willing to face market volatility for long-term wealth creation.

Tier-II and smaller states are catching up – States with smaller geographies are showing rapid adoption of mutual funds, beyond metros.

Diversification matters – While equity dominates, debt and liquid funds continue to balance investments, especially in uncertain markets.