Mutual Fund Industry in India Set to Cross ₹300 Trillion AUM by 2035

The Indian mutual fund industry has emerged as one of the most dynamic segments of the country’s financial services landscape. Fueled by sustained retail participation, digital adoption, and a structural shift in household savings, the industry’s Assets Under Management (AUM) are projected to exceed ₹300 trillion by 2035.

This growth trajectory reflects not just market performance but also deepening financial literacy and broader investor inclusion across demographics and geographies.

Current Industry Landscape

As of November 2025, India’s mutual fund industry reported an AUM of approximately ₹81 trillion, marking an 18.7% year-on-year growth from the previous year’s ₹68 trillion. Over the past five years, this asset base has nearly tripled, recording a compound annual growth rate (CAGR) of nearly 21.9%. Equity-oriented funds continue to anchor this expansion, with open-ended equity fund AUM quadrupling in just five years—from around ₹9 trillion in late 2020 to ₹36 trillion in 2025.

The industry’s expansion has occurred despite global macroeconomic uncertainties, reflecting strong domestic inflows and investor confidence. Systematic Investment Plans (SIPs), which promote disciplined, long-term investing, have been a consistent engine of growth. By November 2025, SIP AUM alone reached ₹16.53 trillion, accounting for over 20% of total mutual fund assets.

Factors Driving Long-Term Growth

#1. Deepening Retail Participation

One of the most significant structural changes in the Indian mutual fund sector is the widening investor base. Historically, mutual fund investing was concentrated among urban, affluent investors. Today, households from smaller towns and cities, younger investors (including Gen Z), and women are increasingly participating in market-linked savings through mutual funds. Analysts attribute part of this trend to greater financial awareness and the accessibility afforded by online platforms and mobile apps.

According to reports, mutual fund penetration across Indian households is expected to double from approximately 10% to 20% over the next decade, indicating that a larger proportion of the population is allocating savings into market-linked financial products. The increasing share of SIP contributions in the overall AUM further reinforces a behavioral shift from traditional savings instruments to equity and hybrid products.

#2. Digitization and Fintech Enablement

The rise of digital platforms has played a transformative role in broadening mutual fund access. Mobile apps and online brokerage platforms have simplified the onboarding process, reduced paperwork, and enabled real-time portfolio management, making mutual fund investing convenient for first-time investors. Fintech platforms have also popularised financial planning tools that help investors choose products aligned with their risk profiles and financial goals.

In addition to digital ease, small-ticket SIP offerings—which allow investors to start with amounts as low as ₹500—have lowered barriers to entry, enabling participation from tier-2 and tier-3 city investors. These trends have expanded the retail base beyond metro regions and into emerging markets throughout India.

#3. Supportive Regulation and Product Innovation

Regulatory support from the Securities and Exchange Board of India (SEBI) has helped improve transparency, investor protections, and product diversity. While recent reforms have focused on disclosure requirements and fee frameworks, regulators have also encouraged the development of innovative investment products, including passive funds, thematic funds, and ETFs (Exchange Traded Funds), catering to different investor needs.

Product innovation has enabled growth across categories—from equity and hybrid funds to debt and passive investment options—thereby attracting a wider spectrum of investors seeking varied risk-return profiles. ETF AUM, for instance, has doubled in three years, crossing notable milestones and indicating robust demand for passive investment strategies.

#4. Shift Toward Long-Term Investing

The growing maturity of Indian investors is evident in the rising preference for long-term investment horizons. SIPs, which emphasize periodic investing irrespective of market conditions, encourage habit-based investing. Long-term allocations in mutual fund portfolios—especially in equity and hybrid categories—have increased as investors seek wealth creation through capital market participation rather than short-term speculation.

This shift is complemented by rising financial literacy campaigns and advisory services that promote goal-based investing, retirement planning, and wealth accumulation through diversified mutual fund portfolios.

Also Read: Top 7 Large & Midcap Mutual Funds in 5 Years

Projections Toward ₹300 Trillion

Multiple industry outlook reports project that, if current trends persist, the Indian mutual fund industry’s AUM could surpass ₹300 trillion by 2035—nearly four times the size observed in 2025. These projections consider macroeconomic factors, continued retail adoption, and sustained inflows driven by both SIPs and lump-sum investments.

Consulting firm Bain & Company, in partnership with investment platform Groww, suggests that mutual funds may see their direct equity holdings reach ₹250 trillion by 2035, signalling not only growth in assets but also a stronger equity orientation among Indian households. A doubling of household penetration and growth beyond metropolitan centers are central to these forecasts.

Implications for Investors and the Economy

For Retail Investors

• Wealth Creation Opportunities: The projected expansion of the mutual fund industry underscores significant wealth creation potential, particularly for long-term investors who consistently use SIPs to compound returns over time.
• Diversified Investment Choices: With the proliferation of equity, hybrid, debt, thematic and passive fund options, investors have more tools to tailor portfolios according to their financial objectives and risk tolerance.
• Enhanced Financial Inclusion: As mutual fund penetration deepens, investors from smaller cities and non-traditional segments will gain access to organized financial products, aiding in inclusive economic participation.

For the Financial Sector

• Asset Management Growth: Fund houses and asset management companies (AMCs) stand to benefit from scale, innovation, and expanded distribution channels, potentially increasing competitiveness and efficiency.
• Capital Market Development: Larger mutual fund AUM supports capital market liquidity, aids infrastructure financing through debt funds, and fosters corporate growth via equity markets.
• Regulatory Evolution: As assets grow, regulations will continue to evolve to ensure investor protection, fair pricing, and systemic stability.

For the Indian Economy

The increase in mutual fund AUM contributes to the financialization of savings, shifting reliance from traditional tools like bank deposits to market-linked instruments that support productivity and growth. Over time, enhanced participation in equity markets can help deepen India’s capital markets, attract foreign institutional investments, and align domestic savings with productive sectors of the economy. These dynamics are critical as India aims for sustained economic growth and financial inclusion over the coming decade.

Challenges and Risks

Despite a positive outlook, several challenges merit attention:

• Market Volatility: Equity-oriented funds are sensitive to market cycles, and sustained inflows depend on investor confidence during downturns.
• Economic Headwinds: Global economic uncertainties and geopolitical risks can impact investor sentiment and capital flows.
• Financial Literacy Gaps: Ensuring investors understand risk-reward dynamics remains essential for long-term sector health.

Conclusion

The projection that the Indian mutual fund industry could cross ₹300 trillion in AUM by 2035 underscores a transformative era in the country’s financial landscape. This growth is driven by retail inclusion, digital innovation, supportive regulation, and a shift toward long-term investment cultures. For investors, fund houses, and the broader economy, this trajectory represents both opportunity and responsibility—demanding informed decision-making, robust risk management, and continued focus on financial education.

By aligning investment strategies with evolving market structures and household preferences, India’s mutual fund industry is poised to play a pivotal role in wealth creation and capital market development for years to come.

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