Mutual fund AUM set to surpass Rs 300 trillion by 2035: ICRA Analytics

The Indian mutual fund industry’s AUM as of May 2025 had surpassed the Rs 70 trillion mark, and within the next six months, it crossed the Rs 80 trillion mark despite global uncertainties. Given this trajectory, market participants are of the opinion that India is well‑positioned to cross the Rs 100 trillion threshold within the next few years if current inflow trends and market performance persist. Industry reports suggest that India’s mutual fund AUM may surpass Rs 300 trillion by 2035, fuelled by digital adoption, rising participation from Gen Z, women, and households in smaller towns, as well as the shift toward long‑term investing through SIPs, according to a press release by ICRA Analytics.

The industry has witnessed a remarkable expansion in 2025, with assets under management (AUM) climbing to Rs 81 trillion in November 2025, up from Rs 68 trillion in November 2024, registering a year-on-year growth of 18.69% and nearly tripling over the past five years, posting a CAGR of 21.91%. Sustained net inflows, strong market performance, and deepening retail participation, aided by digitisation and financialisation of savings, have contributed to the steady surge in AUM, the release said.

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“Beyond Rs 100 trillion, the long‑term outlook points to even more transformative growth. The geopolitical situation and global uncertainties notwithstanding, the domestic mutual fund industry has showcased resilience backed by a sense of optimism regarding the growth prospects of the Indian economy, strong participation from retail investors, broadening investor base including Gen Z, women, and growing interest and awareness among investors from smaller cities regarding mutual funds,” Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics, said.

Fund-wise trends

The AUM of open-ended equity funds quadrupled over a five-year period from Rs 9 trillion in Nov-20 to Rs 36 trillion in Nov-25. On a year-on-year basis, the same went up 17.45% from Rs 30 trillion in Nov-24. Within the equity fund space, the flexicap funds witnessed maximum growth, increasing by around 25.21% on a year-on-year basis from Rs 4.35 trillion in Nov-24 to Rs 5.45 trillion in Nov-25.

“Flexicap funds tend to show strong YoY growth because of a combination of strategic flexibility, diversified exposure, and favourable market conditions. The flexicap fund category is closely followed by multi-cap fund and large & midcap fund categories, which were up by 24.78% and 22.78% YoY,” Kumar said.

The corpus of debt funds also went up 14.82% YoY from Rs 17 trillion in Nov-24 to Rs 19 trillion in Nov-25. The money market funds witnessed the highest YoY growth at 40.22% from Rs 2.55 trillion in Nov-24 to Rs 3.57 trillion in Nov-25. The same is followed by ultra short duration funds and low duration funds, the corpus of which rose 33.49% and 32.92% annually to Rs 1.49 trillion and Rs 1.57 trillion respectively.

“Low‑duration mutual funds are preferred because they offer a blend of stability, liquidity, and modest but reliable returns, making them ideal for short‑term financial needs. Their shorter maturity profile, typically 6-12 months, makes them far less sensitive to interest rate fluctuations, resulting in lower volatility compared to long‑duration debt funds,” Kumar pointed out.

In the equity fund performance space, the smallcap funds witnessed maximum growth over five- and ten-year tenures, reporting a CAGR of 24.91% and 16.70% respectively as on Nov 30, 2025. Meanwhile, credit risk funds witnessed maximum returns of 10.81% and 8.93% over the 1- and 3-year period respectively in the debt space.

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Systematic Investment Plans (SIPs) have emerged as one of the strongest and most reliable engines of growth for the Indian mutual fund industry, contributing significantly to both asset expansion and investor participation. By Nov-25, SIP AUM had reached Rs 16.53 trillion, accounting for more than 20% of the mutual fund industry's total AUM, highlighting their pivotal role in boosting long‑term asset accumulation.

The monthly SIP contribution rose 16.29% YoY from Rs 25,320 crore in Nov-24 to Rs 29,445 crore in Nov-25.

In Nov 2025, close to 27.52% of assets held by individual investors were from B30 locations, while 4.76% of institutional assets came from B30 locations. Institutional assets are concentrated in T30 locations, accounting for 95.24% of the total. In Nov 2024, 27.04% of assets were held by individual investors from B30 locations and 4.66% of institutional assets from B30 locations.

“Smaller states and union territories beyond the top 10 states have been witnessing a steady surge in investments into mutual funds backed by increasing awareness among people, the growing interest among retail investors for investing in equities through the mutual fund route, and the opening up of branches of AMCs (asset management companies) beyond the top 30 towns. The burgeoning middle class and rising financial literacy are prompting more and more people to resort to financial planning so as to accrue savings, particularly through the SIP route,” he said.

Nearly 27.82% of retail investors opted for direct investments, while 64.91% of retail investors came through the route of Non-Associate Distributors in November 2025. Meanwhile, 25.12% of retail investors opted for direct investments in Nov-24, while 67.31% of retail investors came through Non-Associate Distributors.

During Nov-25, 29.45% of High Net Worth Individual (HNI) assets were directly invested, compared to 27.57% in Nov-24. Additionally, 48.31% of the mutual fund industry's assets were invested directly as against 46.22% in November 2024, and 45.49% came from Non-Associate Distributors in Nov-25 as compared with 47.06% in November 2024.