India Mutual Fund Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

India Mutual Fund Market Trends and Insights

Rising Retail Participation via SIPs

Recurring contributions remain the steady backbone of equity inflows, and they held firm even when price volatility picked up during parts of 2025 by smoothing allocation over time and reducing timing risk for new investors. SIP-driven flows have become more prominent within total equity inflows as distributors emphasize rupee cost averaging and long-horizon discipline over one-time deployments. The investor base expanded as new accounts were opened across more locations, with digital KYC and simple mandate registration making it easier to start or scale monthly contributions without paperwork. AMFI’s outreach and disclosures helped keep engagement high during corrections since investors could track scheme behaviour and relative performance on standardized risk and return metrics. The India Mutual Fund Market now carries a larger foundation of long-tenure retail folios that tend to persist through cycles, which supports steadier net inflows even when valuations consolidate.

Rapid Digital Distribution via Fintech & RIA Platforms

Digital channels do most transactions for the India Mutual Fund Market as fintech platforms, AMC apps, and broker ecosystems cut onboarding time and make SIP set-up a short, guided process. AMC case studies show that a very high share of new purchase transactions moved online by fiscal 2026, reflecting the maturing role of Aadhaar-based KYC, DigiLocker, and UPI autopay in account opening and mandate execution. Digital rails also broaden reach beyond metros as vernacular interfaces and lightweight applications gain traction in Tier-2 and Tier-3 cities, closing the distribution gap with low-cost direct plans and standardized disclosures. Exchanges support this shift with industry platforms that give distributors and investors an electronic gateway to transact and monitor holdings across AMCs in a single dashboard. Large AMCs report a high digital share of new SIP originations and purchases, which underlines how the India Mutual Fund Market continues to digitize both front-end acquisition and mid-office processes.

Regulatory Push for Transparency & Lower Costs

SEBI’s new framework for 2026 introduces base expense ratio caps, unbundles statutory charges from capped fees, and tightens brokerage limits, which together reduce opaque costs and improve apples-to-apples comparisons for investors ^{[1]Upstox, “SEBI Mutual Funds Regulations 2026 Highlights,” Upstox, upstox.com}. The rules also address redemption-linked pricing and past incentives, and they bring price discipline to execution costs that had varied across cash and derivatives transactions. On the operational side, SEBI’s Cybersecurity and Cyber Resilience Framework sets baselines on security operations and recovery objectives, including red teaming and data localization that extend to service providers in the ecosystem. ^{[2]Securities and Exchange Board of India, “Frequently Asked Questions on Cybersecurity and Cyber Resilience Framework,” SEBI, sebi.gov.in} These changes lift the compliance bar while standardizing disclosures so investors can see fee components and incident-handling readiness more clearly across comparable funds. The India Mutual Fund Market experiences a net effect of stronger cost discipline and more robust controls, which help maintain trust and compress administrative drag on investor returns.

Shift of Pension Assets to Long-Duration Debt Schemes

Large retirement pools allocate sizable shares to long-duration fixed income, and that supports liquidity and depth for select debt strategies managed by leading AMCs. The EPFO’s equity exposure via ETFs complements an underlying core allocation to government and high-grade corporate paper that continues to be intermediated by mutual funds in specific mandates. The growth of NPS participation sustains steady flows into long-duration bonds in line with conservative defaults and risk-calibrated models under the regulator’s framework for retirement saving. Corporate treasuries and affluent households also leaned into debt schemes when equity volatility rose during 2025, which increased the relevance of duration management and liquidity in fixed income portfolios run by AMCs. The India Mutual Fund Market benefits structurally as this pool of institutional-grade demand underwrites product development and scale advantages in fixed income that retail investors can access at low cost.

Liquidity Stress in Small-Cap Funds Requires Buffers

Stress tests highlighted how liquidity can concentrate in small-cap schemes with larger asset bases, which requires explicit buffers and dynamic rebalancing to protect investors during sharp redemptions. AMFI and AMCs introduced measures such as cash cushions and SIP size caps during stress phases so portfolios can meet outflows without undue market impact ^{[3]Bajaj Finserv Asset Management, “How market crashes impact mutual fund investors,” Bajaj AMC, bajajamc.com}. Portfolios diversified into a mix of large, mid, and small-cap positions and kept a small cash allocation that could be tapped for redemptions, while turnover and execution costs were carefully managed. The India Mutual Fund Market adopted these practices in response to measured regulatory prompts and disclosed stress metrics more frequently to ensure transparency for investors tracking liquidity risk. The underlying challenge remains market depth in the least liquid counters, which is why long-hold SIP participation is favoured over large one-time inflows in these categories.

Heightened Cyber-Security & Data-Privacy Risks

SEBI’s cybersecurity framework is now embedded in operating requirements for AMCs and their service partners, and it raises the bar for detection, response, and recovery across critical systems. The framework includes clear expectations on recovery objectives, data sovereignty, and periodic red teaming as part of a structured approach to manage risks from evolving threat vectors. Industry utilities have adjusted data-sharing flows so that consent is unambiguous and access is routed through standardized frameworks for privacy and security. The India Mutual Fund Market is allocating more resources to cybersecurity and vendor assessments because accountability extends to outsourced providers under the regulator’s expectations. Over time, better controls and clearer consent mechanisms should support continued digital adoption without eroding trust in data handling and service continuity.

Segment Analysis

By Fund Type: Equity Dominance Persists Amid Passive Gains

Equity-oriented funds held 59.08% of total industry assets in 2025 and are projected to grow at an 8.14% annual rate through 2031, which places them ahead of the overall India Mutual Fund Market pace. The India Mutual Fund market size remains anchored by equity because systematic investing structures and broader participation support continued net inflows even during valuation resets. Debt schemes benefited in 2025 when price volatility pushed allocators to stable coupon income and duration strategies managed by established AMCs with deep fixed income teams. Hybrid categories captured flows from investors who prefer diversified exposure inside a single scheme, and that includes arbitrage funds that used spread opportunities when markets were choppy. Passive baskets expanded within the “Others” grouping as commodity ETFs and index replicators attracted cost-sensitive investors who prefer simple, rules-based products under tighter expense caps.

Within equities, category share shifted with cycle conditions as flexi-cap and large-cap styles saw stronger inflows where broader liquidity was available, while small and mid-caps required tighter risk controls during late-2024 and 2025 corrections. Debt categories drew institutional allocations tied to pension and treasury demand, which stabilized flows and underpinned steady AUM growth across long-duration and high-quality credit schemes. Hybrid funds posted consistent growth because they simplify asset allocation for households that want automatic rebalancing and a mix of return sources under changing market conditions. Passive equity funds and ETFs benefited from lower base expense ratios as the 2026 rules took effect, which increases their long-term appeal as building blocks in diversified portfolios. Overall, the India Mutual Fund Market maintains a barbell of active alpha in less efficient segments and passive beta in broader exposures that complement household and institutional objectives.

Note: Segment shares of all individual segments available upon report purchase

By Investor Type: Retail Ascendancy Reshapes Flow Dynamics

Retail held 60.39% of total assets in 2025 and is slated to grow at 7.36% through 2031, which signals lasting household participation in the India Mutual Fund Market. The India Mutual Fund industry deepened its reach in 2025 as investor education and SIP-led onboarding brought in consistent contributions across age groups and income cohorts. Institutional allocators kept a stable presence through provident, pension, and treasury flows that support depth in debt categories and strategic exposure to beta through ETFs. The retail mix leaned toward equity and hybrid schemes for long-term goals, while institutions focused on liquidity, duration, and execution in fixed income aligned with policy and risk frameworks. The India Mutual Fund Market now serves a broader base of first-time investors through digital channels and a maturing group of experienced households that fine-tune allocations as objectives evolve.

Within the retail segment, SIP structures are the entry point for most households, and they reduce sensitivity to short-term swings in prices by spreading buys across cycles. As product disclosures, risk meters, and benchmarking get more standardized, households compare schemes on risk-adjusted returns rather than marketing claims, which improves decision quality. Institutions continue to shape flows in debt funds and ETF demand that anchors the passive ecosystem, especially as asset-liability frameworks for retirement schemes drive the need for predictable exposure. AMC reports show strong growth in digital onboarding within retail, with a high share of new SIPs and purchases originating through mobile and web channels in fiscal 2025 and 2026. This two-speed pattern, where institutions set the tone in fixed income and retail powers equity flows, is now a defining feature of the India Mutual Fund Market across cycles.

By Management Style: Active Retains Market Share as Passive Gains Velocity

Active funds held 74.26% of assets in 2025, while passive strategies built momentum from a lower base with an 8.61% projected growth rate to 2031, and that divergence shows the current mix of alpha-seeking and beta-building allocations. Passive ETFs and index funds expanded as base expense caps tightened and disclosures became more comparable across categories ahead of the 2026 implementation timeline. Commodity ETFs grew quickly within passive as investors adopted hedging exposures in simplified wrappers that trade through exchange accounts and standard settlement cycles. The India Mutual Fund Market still relies on active managers in segments with uneven liquidity and higher dispersion, where research depth and execution quality can add value over broad benchmarks. The outcome is a blended approach where passive serves as low-cost core exposure and active allocations target areas with potential for consistent excess returns over a full cycle.

As expense transparency improves, investors evaluate whether a given category is better served by passive exposure or by an active fund that demonstrates repeatable skill, sensible capacity, and clear liquidity practices. AMC performance reporting and standardized risk disclosures support that evaluation by clarifying volatility, drawdowns, and benchmark-relative returns through time. Passive adoption also benefits from distribution through brokerage apps and exchange-linked platforms that let investors consolidate holdings with other securities under unified credentials. Active funds continue to attract flows where bottom-up work and liquidity-aware execution can drive outcomes in categories that do not lend themselves to commoditized replication. This balance underpins the India Mutual Fund Market’s diversity of investment styles, which helps match products to different time horizons and risk preferences.

Note: Segment shares of all individual segments available upon report purchase

By Distribution Channel: Online Platforms Disrupt Traditional Intermediaries

Online trading platforms held a 33.42% share of distribution in 2025 and are projected to grow at 9.22% through 2031, which signals a durable shift in how investors access the India Mutual Fund Market. AMCs report that nearly all purchase transactions are now executed digitally for select fund houses, and that shift came with accelerated onboarding speed and lower costs to serve. Exchange-backed transaction platforms enable distributors and investors to place orders across many AMCs from a single interface, which streamlines execution and portfolio tracking. Major AMCs show that digital share in new SIP origins and purchases crosses a strong majority, and that confirms the distribution pivot to mobile- and web-first journeys. The India Mutual Fund market size, therefore, continues to expand alongside digital channels as investors adopt direct plans and standardized disclosure formats that fit self-directed and assisted journeys.

Traditional bank-led and IFA-led channels still play an important role for affluent clients and lump-sum placements that require guided conversations on taxes, asset location, and rebalancing. Securities firms use brokerage apps to cross-sell mutual funds into existing investor bases where KYC is pre-verified, and payment rails are already set, which also aids ETF adoption within demat ecosystems. National and regional distributors maintain reach in towns and districts where physical presence builds trust, even as they lean on digital mid-office tools for servicing. The India Mutual Fund Market is converging on a hybrid distribution model where high-touch advisory and low-cost execution coexist under clearer rules and higher cybersecurity standards. Over time, tightened BER caps and disclosure norms should keep pushing execution toward digital channels while advice differentiates on planning, behaviour coaching, and complex needs.

Geography Analysis

The India Mutual Fund Market remains concentrated in the top 30 cities, which accounted for a significant majority of AUM in 2025, while the share of locations beyond the top 30 continued to climb after a multi-year push on digital rails and outreach. B30 assets posted faster growth than the national average during fiscal 2019 to 2025, and that trajectory reflects rising participation in state capitals and district hubs where banking and mobile connectivity scaled up in tandem. Payment adoption helped close the collection gap for SIP mandates as UPI and standardized KYC reduced onboarding time and manual paperwork that had limited reach in the past. As investor education content is localized into regional languages, mutual funds became more approachable for first-time buyers in Tier-2 and Tier-3 cities who value predictability and consistent contributions for long-term goals. These developments support the India Mutual Fund Market’s steady broadening beyond historical core metros, even as the largest cities still drive the direction of flows and performance in aggregate.

Metros like Mumbai, Delhi NCR, Bengaluru, and Hyderabad continue to lead by asset share because they host corporate treasuries, high-income cohorts, and institutional allocators that transact larger tickets and diversify across categories, including passive. Ahmedabad and other Gujarat hubs contribute a growing share as entrepreneurs and family businesses incorporate mutual fund allocations alongside traditional bank deposits and securities holdings. Chennai and Pune reflect different investor mixes across manufacturing and information services, which shows how local industry composition shapes the tilt toward debt, hybrid, or equity categories. AMC branch networks and distributor density remain highest in metro clusters, yet most new account originations now flow through digital channels even where branches are present. The India Mutual Fund Market thus sits on a dual track where metros anchor absolute assets and non-metros deliver faster percentage growth off a smaller base.

B30 growth requires consistent education, easy service access, and standardized disclosures so investors can compare products without ambiguity on cost or risk across categories. With improved cyber resilience and clarified data stewardship, digital channels can keep scaling in smaller cities while protecting investors from misuse of personal and portfolio data. Utility platforms run by exchanges help keep transactions reliable and reduce operational breakage for distributors serving suburban and rural clients with limited back-office capacity. AMC reports show how hybrid distribution models blend branch-led advice for complex needs with app-based execution for everyday transactions in B30 coverage. This approach should sustain the India Mutual Fund Market’s widening footprint as connectivity and trust improve outside the largest metros over the next several years.