India’s mutual fund assets under management (AUM) are projected to hit Rs 315 lakh crore by FY2035, driven by rising household participation, regulatory support, and stronger investor trust, according to a new report from Bain & Company and Groww.
The study forecasts roughly 25 million new MF households over the next decade from mass and mass-affluent segments in metro and Tier-1 cities, propelled by continued digital adoption. Another 5 million households are expected to come from Tier-2 and Tier-3 cities, where a ‘phygital’ model will be needed to expand reach.
Growth seen beyond the top cities
“Household penetration is set to double over the next few years, driven by expansion in beyond-top-30 cities,” said Aashish Somaiyaa, CEO of White Oak Capital. “Ensuring a mix of high-touch engagement in the digital realm will be key to expanding the investor base.”
According to the report, growth in the top 30 cities will be led by deeper digital adoption, affordable SIP options for mass-market investors, efforts to convert F&O traders into MF investors using digital channels, and higher uptake of direct passive funds that require minimal fund-selection effort. For the next 70 cities, expansion will be driven by digital platforms offering intuitive interfaces and goal-based investing tools.
The report noted that 55% of investors in B30 cities are under 40. RIA penetration is also expected to rise, with half of new SIP registrations in these cities routed through RIAs. Additional tax incentives for retirement-focused MF schemes could further accelerate adoption.
While the number of folios has risen 2.5 times in the past five years, individual gross flows have grown just 7%, constrained by the influx of first-time investors with smaller ticket sizes. The average SIP contribution slipped to Rs 3,000 in FY25, compared with Rs 3,200 in FY15.
AMFI push strengthens investor trust
“AMFI has successfully popularized mutual funds through its ‘Mutual Funds Sahi Hai’ campaign—so much so that it’s become a pull product,” said Varun Gupta, Head of Asset Management at Groww. “It remains a preferred investment avenue even during muted market cycles.”
The report also highlighted that while distributor-led channels still dominate, direct plans are steadily gaining share as do-it-yourself digital platforms scale. “Direct plans are getting increasingly popular—even private bankers and HNI wealth managers are allocating to them,” Somaiyaa said. “That said, national distributors, regional distributors, and MFDs will continue to play a critical role in driving penetration.”
Equity AUM is expected to reach about Rs 250 lakh crore by FY2035, supported by rising digital engagement, a shift in investor behavior, and robust market performance.
Monika Halan, chairperson of IPEF, Sebi said: “Regulators and market participants have built a safe, transparent market. Now, the real opportunity lies in driving awareness by building on trust and market performance, helping everyday Indians choose long-term investing over short-term speculation.”