Despite nearly 2,700-point rebound in India’s benchmark 50-stock index from its February low, the growth in new mutual fund investors has remained subdued. Industry experts attribute this to high valuations, market volatility, and some investors possibly booking profits — but caution that this should not be viewed as a long-term trend.
From March to May, the number of new investors added each month was around 3–4 lakh — significantly lower than the 7–8 lakh added monthly during November to January, and well below the peak of 12 lakh in July last year, according to a report by Franklin Templeton. The data shows that 3.19 lakh investors were added in May 2025, while 89 lakh new investors joined over the past 12 months, compared to 78 lakh during the same period last year.
Association of Mutual Funds in India (AMFI), chief executive, Venkat N Chalasani, said: Given the market volatility over the last few months, we have witnessed some slowdown in the new investor addition. However, we don’t see that as a trend. The number of SIPs and monthly contribution coming via SIPs has been consistently going up, which is a much better reflection of retail investor interest in mutual funds, he added.
Suranjana Borthakur, head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India), said that the recent slowdown in new investor additions, returning to June 2023 levels after a surge in July 2024, can be attributed to several factors like cautious sentiment due to elevated valuations and ongoing global uncertainties. She said, “Investor interest often follows recent market performance, and as market momentum moderates, retail participation tends to soften.”
Further, she said that some investors may be engaging in profit-booking following recent market gains. “We also observe a growing preference for Systematic Investment Plans (SIPs) for their rupee cost averaging benefits, which may not reflect as new investor additions but indicates increased commitments from existing investors,” she said, adding that investor participation is expected to stabilise as market conditions evolve and global economic clarity emerges.