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India’s mutual fund and equity assets set to grow more than sixfold by FY2035 : Report
The mutual fund ecosystem continues to deepen and expand, with the next wave of growth driven by increasing household adoption, strong digital enablement, supportive regulation and growing investor trust.
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According to the report, mutual fund penetration across Indian households is expected to double from 10% to 20% over the next decade. The next phase of industry growth will come primarily from mass and mass-affluent households beyond the top 30 cities.
Increased adoption among affluent investors across the next 70 cities will further accelerate this expansion and the share of long-term holdings is also rising; over-five-year holdings in industry AUM have doubled from 7% to 16%, and over-five-year SIP holdings have increased from 12% to 21%, reflecting growing investor trust and confidence.
“Indian households are steadily shifting from a traditional savings mindset to a more investment-oriented approach, with mutual funds and direct equities emerging as the fastest-growing asset classes in recent years,” said Saurabh Trehan, Partner & Head of Bain & Company’s Financial Services practice in India.
“As more households, especially young and first-time investors and those beyond the top 30 cities embrace market-linked products and longer holding periods, we’re seeing the emergence of a deeper and more resilient domestic investor base. With SIP inflows and long-term holdings rising sharply, this evolution will be central to how India finances its growth in the years ahead,” Trehan added.The report further added that the expected growth in equity participation, on the other hand, can be attributed to the shift from speculative trading to long-term investing, in addition to continued digitally driven penetration and strong market performance. Approximately 9 crore incremental retail investors are expected from Gen Z and millennials, led by higher digital adoption and growing financial literacy.
The report highlights a broad-based democratisation of investing in India, with rising participation from younger investors, women, and households beyond the major metros. India’s investor demographics are shifting rapidly, with a new generation of participants entering the market and likely to contribute to the market growth.
Mutual fund folios have grown 2.5x in the past five years, yet individual gross flows have increased by just 7%, underscoring the entry of a large cohort of new investors with smaller ticket sizes, the report said.
Average monthly SIP inflows have risen at an estimated 25% CAGR over the last decade, driven largely by 18 to 34-year-olds, a demographic which is increasingly shaping the direction of domestic capital markets. Younger investors under 30 now represent 40% of NSE-registered investors, compared with 23% in FY19, underscoring the generational shift driving India’s capital markets.
Another key trend highlighted in the report is rising participation from smaller urban centers Today, 55%-60% of new SIP registrations originate from B30 cities, demonstrating that India’s investment ecosystem is broadening beyond major metros. Cities beyond the top 110 contributed 19% of mutual fund AUM in FY25, up from 10% in FY19. Women’s participation is also rising steadily with the salience of women investors rising to 25% in FY24 vs 20% in FY19.
The digital platforms have emerged as the fastest-growing channel for retail investing over the last five years, with approximately 80% of equity investors and 35% of mutual fund investors being onboarded through these platforms.
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Gen Z now makes up approximately 45% of the investor base and continues to grow, with salaried individuals forming the dominant occupational segment. The reach of digital platforms is no longer confined to major metros with Tier-2+ city investors making up nearly half of all digital platform users further demonstrating the increasingly broad-based reach of digital investment channels across India.
“We are witnessing a definitive structural shift in Indians—moving from a savings-first to an investing-first mindset. The government’s push on digital infrastructure, combined with progressive regulatory measures, has democratized access and fostered deep trust in the ecosystem. A diverse, resilient investor base is emerging from Tier 2+ cities and younger demographics, who are strengthening India’s capital markets from within.”, said Harsh Jain, co-founder and COO, Groww.
Retail investing is set to play a pivotal role in India’s journey toward a $10+ trillion economy, contributing across capital access, wealth creation, and employment.
One of the most important contributions of retail investing is improved access to capital. Higher participation provides deeper liquidity in capital markets, enabling more primary issuances particularly for micro, small, and medium-sized enterprises.
Reflecting this trend, annual SME IPO proceeds have risen sharply from around Rs 1,800 crore in FY19 to nearly Rs 6,000 crore in FY24, significantly expanding the availability of growth capital.
At the same time, greater financial awareness and digital access are democratizing wealth creation, helping diverse demographics shift from traditional deposits toward higher-return market-linked products. This shift is particularly important for improving financial independence among women and enabling younger investors to build long-term wealth.
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Retail investing is poised to create more than 7 lakh new jobs, both within the financial ecosystem and across businesses gaining access to growth capital. The growing prominence of domestic mutual funds and rising retail inflows is also reinforcing the resilience of India’s capital markets, acting as a counterweight to foreign portfolio outflows and enabling faster recoveries during periods of volatility.
“India is entering a new era of retail investing, one that is poised to play a pivotal role in the country’s economic development. By expanding access to capital, broadening wealth creation, unlocking new job opportunities, and strengthening the resilience of India’s capital markets, retail investors are reshaping the flow of capital in meaningful ways. Just as importantly, steady domestic inflows are giving India’s capital markets a level of resilience we haven’t seen before, helping them to absorb volatility and recover faster.”, said Rakesh Pozhath, Partner and a leading member of Bain & Company’s Financial Services practice in India.
As participation deepens across demographics, generations, and geographies, India’s investment landscape is entering a more inclusive, resilient, and mature phase. These shifts from longer holding periods to a sustained SIP culture and wider adoption across the country mark a fundamental turning point in how India builds long-term wealth and capital market strength for the decade ahead.
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