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A new report by Bain - Company and Groww indicates that India's mutual fund AUM could exceed INR 300 lakh crore by 2035, supported by rising retail participation and strong digital adoption. Direct equity holdings are projected to reach INR 250 lakh crore, helped by a shift from speculative trading to long-term investing. The report found that mutual fund penetration across households may double to 20 per cent in the next decade. Younger investors, women and smaller cities are driving steady growth, while regulatory measures and digital platforms continue to strengthen overall market participation.
A joint study released earlier this week by Bain & Company and investment platform Groww projected that India's mutual fund assets under management could cross INR 300 lakh crore by 2035. The same report estimated that direct equity holdings may reach around INR 250 lakh crore by that time. The researchers attributed this outlook to rising retail participation, deeper digital usage and a steady shift toward long-term investing. Advertisement
The report, titled How India Invests, stated that mutual fund penetration among households is likely to rise from the current 10 per cent to nearly 20 per cent over the next decade. It added that the upcoming phase of industry growth will be supported by higher household adoption, continued digital enablement, stable regulatory actions and a visible rise in investor trust.
On the equity side, the study noted that participation is expected to grow as more individuals move away from speculative activity toward consistent long-term investment strategies. This trend has strengthened over the past few years as digital platforms have widened market access and overall market performance has remained firm.
The Securities and Exchange Board of India has introduced stricter rules to manage excessive speculation in derivatives. These measures have raised costs and entry barriers for futures and options trading, encouraging retail investors to consider steadier investment routes. A recent SEBI assessment showed that 93 per cent of individual traders recorded losses in F&O between FY22 and FY24, reinforcing the larger behavioural shift.
According to the report, nearly 9 crore additional retail investors are expected from Gen Z and millennial groups over the coming years, mainly due to rising digital familiarity and improved financial awareness. Bain India's Financial Services practice head, Saurabh Trehan, noted that Indian households are gradually moving from a savings-led approach to an investment-focused outlook, with mutual funds and direct equities becoming prominent choices. He also observed that increased participation from first-time investors and people outside major metro cities is shaping a more resilient domestic investor base.
The study highlighted that long-term behaviour is strengthening. Mutual fund holdings above five years have risen from 7 per cent to 16 per cent, and SIP holdings of more than five years have grown from 12 per cent to 21 per cent. Younger investors, women and households in smaller cities continue to widen the investor pool.
Mutual fund folios have expanded 2.5 times in the last five years. However, the report pointed out that individual gross flows grew only 7 per cent, indicating that many new investors are entering with relatively small amounts. SIP inflows have grown at a 25 per cent CAGR over the last decade. Investors under 30 now form 40 per cent of NSE-registered market participants, compared with 23 per cent in FY19. Cities beyond the top 110 contributed 19 per cent of mutual fund AUM in FY25, up from 10 per cent in FY19, while 55-60 per cent of new SIP registrations now originate from B30 locations. Women currently account for about 25 per cent of the investor population.
Digital platforms have further reshaped behaviour, with nearly 80 per cent of equity investors and 35 per cent of mutual fund investors being onboarded digitally. Tier-2 and smaller cities make up almost half of this digital activity. Groww's Co-founder and COO, Harsh Jain, said that improved digital infrastructure and consistent regulatory progress have broadened access and strengthened investor confidence.
The report also linked retail participation to India's broader economic goals, stating that growing investments could contribute meaningfully to the country's path toward a USD 10 trillion economy. It estimated that retail investing may create over 7 lakh new jobs across financial services and other industries as businesses gain easier access to growth capital. The document further pointed to rising activity in the SME IPO segment, with proceeds increasing from roughly INR 1,800 crore in FY19 to nearly INR 6,000 crore in FY24, reflecting stronger liquidity and continued investor interest.
Source PTI
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