GLOBAL MACROECONOMIC SCENARIO
Global economy projected to grow at ~2.5-3.0% in CY 2025
As per the International Monetary Fund (IMF) (World Economic Outlook - April 2025 outlook), global GDP growth is projected at 2.8% in CY 2025 and 3.0% in CY 2026 as compared to 3.3% projected in January 2025 for both CY 2025 and CY 2026. Global growth numbers have been revised on account of swift escalation of trade tensions and high level of policy uncertainty intensifying downside risks. Global inflation is projected at 4.3% in CY 2025 and 3.6% in CY 2026. Furthermore, the risks to inflation remain significant going forward, with tariffs being imposed by US on imports.
US GDP grew at an annualised rate of 2.4% in the fourth quarter of CY 2024 on account of increase in consumer and government spending, offset by a decrease in investments. GDP growth in the euro area slowed to 0.2% in the fourth quarter of 2024 from 0.4% in the previous quarter. The UKs economy picked up slightly to 0.1% in the fourth quarter of 2024 after a flat third quarter, driven by growth in services output as well as construction output. Chinas economy grew 5.4% on-year in the first quarter of 2025, in line with growth in the fourth quarter of 2024. Growth picked up in the secondary industry, even as output growth in the primary and tertiary industry moderated slightly. China has targeted an annual growth rate of 5.0% in 2025, in-line with what was targeted in the previous year. However, given the escalation of trade tensions between the US and China since the start of April 2025, the achievement remains monitorable.
Global economies continued to be buffeted by uncertainties because of a rapidly evolving US trade policy
The Trump Administration in the United States (US) announced a host of tariffs on products such as automobile, automobile parts, steel and aluminium in the first three months of CY 2025. On April 5 2025, US announced additional tariff of 1 0% on nearly all countries in addition to the existing tariffs. China and European Union announced retaliatory tariffs on the US. While the US administration has announced a 90-day pause on most reciprocal tariffs, sectoral tariffs on steel, aluminium, auto as well as a 1 0% baseline tariff on all unexempted merchandise imports into the US remain in place. Additionally, US-China trade tensions have escalated since the start of April, with both countries now imposing tariffs in excess of 1 00% on each other. Uncertainty also remains on the imposition of reciprocal tariffs post the pause if trade agreements are not struck.
As per IMF, global headline inflation is expected to decline to 4.3% in CY 2025 and to 3.6% in CY 2026
In the US, consumer price inflation eased significantly in March 2025 to 2.4% owing to tapering core inflation as well as a sharper fall in energy price. The US Federal Reserve maintained its funds rate at 4.25-4.50% in its March 2025 meeting, citing the persistence of relatively elevated inflation and increased uncertainty regarding the economic outlook. As per their dot plot as of the March meeting, two rate cuts are expected in 2025.
Inflation in the euro area eased slightly to 2.2% in March 2025, owing to cooling energy prices and moderating core inflation. However, food inflation picked up. The European Central Bank cut the deposit facility rate (DFR) - the rate at which the central bank steers monetary action - by 25 bps in March 2025 and a further 25 bps to 2.25% at its April 2025 meeting, as disinflation continues, and trade tensions weigh on household and business confidence while increasing market volatility.
In the UK, inflation moderated to 2.6% in March 2025, led by broad-based easing across categories. Inflation in the food-related category and core inflation softened. In its March 2025 meeting, the Bank of England held interest rates steady at 4.5%, highlighting the need to adopt a gradual and careful approach amid heightened global trade uncertainty and financial market volatility.
Inflation in Japan cooled to 3.7% in March 2025, owing to moderating energy and food inflation. The Bank of Japan maintained its policy rate at 0.5% following its March 2025 meeting, anticipating that inflation will align with its target in 2025. The Peoples Bank of China maintained the one-year loan prime rate at 3.1% in its March 2025 meeting.
INDIAS MACROECONOMIC SCENARIO
India continues to maintain its position as fastest growing major economy in the world
India is expected to remain one of the fastest-growing economies in the world despite challenges posed by global geopolitical instability. In March 2025, the National Statistical Office (NSO), in its second advance estimate of national income, projects the countrys real gross domestic product (GDP) to expand 6.5% on-year in Fiscal 2025. The Indian economy was among the fastest- growing even before the Covid-19 pandemic. In the years leading up to the global health crisis, which disrupted economic activities, the countrys economic indicators improved gradually owing to strong local consumption and lower reliance on global demand. Going forward, the expectation of slower global growth, along with anticipated reciprocal tariffs on India after three months, is likely to exert downside risks to 6.5% growth forecast for fiscal 2026. Uncertainty about the duration and frequent changes in tariffs could also hinder domestic investments. Interest rate cuts, income tax relief and easing inflation are expected to provide tailwinds to domestic
MANAGEMENT DISCUSSION AND ANALYSIS (Contd.)
consumption in Fiscal 2026, while the expected normal monsoon will support agricultural incomes. Moreover, the anticipated decline in global crude oil prices, resulting from a potential global slowdown, is expected to provide additional support to domestic growth. Private consumption is expected improve further on expectations of healthy agricultural production and cooling food inflation. Softer food inflation should create space in household budgets for discretionary spending. Secondly, the tax benefits announced in Union Budget 2025-2026 and increased allocations towards key asset and employment generating schemes are expected to support consumption. Easing monetary policy by the Reserve Bank of India (RBI) is expected to support discretionary consumption. CRISIL Intelligence expects the RBIs Monetary Policy Committee (MPC) to cut the repo rate by 50-75 bps in Fiscal 2026. The central banks recent liquidity-easing measures and easier regulations for non-banking financial companies are expected to transmit the benefits from an easier monetary policy to the broader economy. Geopolitics will continue to be the key monitorable, given the wide-ranging changes that the Trump administration is expected to bring about. Exports will have to navigate heightened uncertainties given United States (US) tariffs.
RBI cuts repo rate in its June 2025 meeting, changing its stance from accommodative to neutral
The Reserve Bank of Indias (RBI) Monetary Policy Committee (MPC) cut key policy rates by 50 basis points (bps) in its June 2025 meeting, amounting to a cumulative reduction of 1 00 bps in CY 2025. The committee also changed its stance from "accommodative" to "neutral", while emphasising that monetary policy space to support growth was shrinking. With inflation risks receding, the MPC is shifting its focus to supporting domestic growth, which faces heightened downside risks following the heavy tariffs imposed by the United States. The repo rate is now 5.50%, standing deposit facility rate is 5.25% and marginal standing facility (MSF) rate is 5.75%. Consumer Price Index ("CPI") inflation to average at 3.7% in FY 2026
The RBI expects CPI Inflation to average 3.7% in fiscal FY 2026, down from its earlier forecast of 4%, emphasising that inflation has softened significantly over the last six months from above the tolerance band in October 2024, The Monetary Policy Committee (MPC) of the RBI stated that the forecast for the first quarter is projected at 2.9 per cent, Q2 at 3.4 per cent, Q3 at 3.9 per cent and Q4 at 4.4 per cent. Record wheat production and higher production of key pulses in the Rabi crop season and expected above normal monsoon along with its early onset augurs well for Kharif crop prospects should ensure adequate supply of key food items. Reflecting this, inflation expectations are showing a moderating trend, more so for the rural households.
GLOBAL MUTUAL FUNDS INDUSTRY
Emerging markets with strong fundamentals are expected to drive growth in global mutual funds in 2025
The global mutual funds AUM reported a growth rate of 7.3% in 2024 driven by investment strategy of diversification, liquidity feature of mutual funds and growing intermediaries. Exchange Traded Funds (ETFs) gained traction over traditional mutual funds due to their lower costs, flexibility and tax advantages. The overall growth was, however, slowed down by the underperformance of average returns as compared to 2023 and a confluence of macroeconomic and geopolitical factors that dampened investor sentiment and fund performance. Conflicts such as Russia-Ukraine war and tensions in the Middle East led to increased market volatility. This uncertainty prompted investors to shift towards safer assets, impacting equity-focused mutual funds.
However, with global mutual funds industry showing resilience, mutual fund AUM-to-GDP ratio improved to 66.7% in 2024 from 65.2% in 2023. The gap between global mutual funds AUM and global GDP is expected to narrow further to 70.6% in 2025. Moreover, the trend of increased global investment in ETFs is expected to persist this year. The overall global mutual funds industry faces a cautious outlook in 2025, shaped by economic uncertainties owing to US tariff policies and recession fears, and evolving investor preferences, and technological advancements. Despite challenges, opportunities exist in the emerging markets with strong domestic fundamentals and rising retail participation.
Note: P: Predicted, year in the above charts represent calendar year, nominal GDP has been considered, mutual funds AUM Is stated as at the end of each calendar year, AUM of open-ended funds excluding fund of funds have been considered.
Source: The International Investment Funds Association (IIFA), World Bank, International Monitory Fund (IMF), CRISIL Intelligence
Indias AUM-to-GDP ratio reached ~20% as of March 2025 led by increased retail participation and improved accessibility
Indias mutual funds industry has experienced significant growth over the past few years which has led to rise in Indias AUM-to-GDP ratio from 11.1% as of March 2020 to 19.9% as of March 2025. The rise in AUM-to-GDP ratio is being driven by a combination of economic, regulatory, and behavioural factors. This includes rising retail participation, improved accessibility, financial awareness, ease of investing owing to technological advancements and digitisation, rising disposable incomes and young demographics.
Note: Net month-end AUM and nominal GDP at current prices have been considered Source: National Accounts Statistics — MoSPI, AMFI, CRISIL Intelligence
Despite strong mutual funds growth, Indias mutual funds penetration (MF AUM-to-GDP ratio) remains relatively low compared to developed countries and some developing peers as well. This is due to a large population still lacking mutual funds awareness, preference of investments in physical assets such as gold and real estate and limited reach in rural areas.
However, low mutual funds penetration in India also reflects immense opportunities. While only a small fraction of the population currently invests in mutual funds, this very gap signals untapped potential. The opportunity is further amplified by Indias rapidly growing middle class, which is seeing rising disposable incomes and a growing appetite for financial investments beyond traditional options. For asset management companies, mutual funds distributors, fintechs, financial advisors, and policymakers, it represents an opportunity to shape how the Indian population saves, invests and build wealth. With the right mix of financial education, accessibility and trust-building, India will continue to witness high growth in mutual funds AUM-to-GDP ratio going forward.
INDIAN MUTUAL FUND INDUSTRY
Indian mutual fund AUM registered strong 24.6% on-year growth in fiscal 2025
The Indian mutual funds industry has witnessed robust growth in recent years, and fiscal 2025 further reinforced this upward trajectory. Several structural, regulatory, and economic factors have collectively contributed to this expansion, supported by strong investor participation and technological transformation. Indias mutual funds AUM increased from 27,03,629 crore as of March 2020 to 67,42,261 crore as of March 2025, registering a strong CAGR of 20.1% during the period. In last two fiscals, the industry has witnessed exponential growth at 33.6% on-year growth as of March 2024 and 24.6% on-year growth as of March 2025. The growth in overall mutual funds AUM was led by equity-oriented funds and ETFs. Equity funds AUM grew by 29.2% year-on-year as of March 2025 whereas ETFs AUM increased by 20.9% year-on-year.
One of the primary drivers of growth has been increased retail investor participation, particularly through Systematic Investment Plans (SIPs). Additionally, digitisation and fintech innovation has dramatically enhanced accessibility to mutual funds. This has significantly widened the investor base, including first-time investors from semi-urban and rural areas. Regulatory support from SEBI has also played a vital role. Measures such as transparent cost disclosures, introduction of direct plans, investor protection frameworks, and enhanced risk-o-meter guidelines have boosted investor confidence. The strong performance of Indian equity markets has also contributed to mutual funds growth, attracting new inflows as investors sought benefit from equity appreciation. Government and industry bodies initiatives and campaigns, notably Association of Mutual Funds in India (AMFI)s "Mutual Funds Sahi Hai" have continued to spread awareness and foster trust among the public. Combined with favourable demographics such as young, aspirational population, and rising disposable income, these efforts have created a fertile environment for sustained mutual fund industry growth in India.
Note: Values in the above chart are based on quarterly average AUM Source: AMFI, CRISIL Intelligence
Number of folios reached 23.5 crore as of 31st March 2025
The number of mutual fund folios in India has witnessed a remarkable surge in recent years, growing at 5-year CAGR of 21% from 9.0 crore as of 31st March 2020 to 23.5 crore as of 31st March 2025. This reflects growing investor interest and participation. Increased awareness and understanding of mutual funds among investors, especially in smaller cities, have contributed to the rise of folio counts. Moreover, AMCs have extended their reach beyond the top 30 cities, making mutual funds accessible to a broader population. The proliferation of online investment platforms and mobile applications has simplified the investment process, attracting more investors.
Source: AMFI, CRISIL Intelligence
Share of equity funds AUM in overall mutual funds AUM reached 60% as of March 2025
The share of equity funds AUM in Indias total mutual funds AUM has seen a significant increase in recent years. It has increased from 42% as of March 2020 to 60% as of March 2025. Several factors have contributed to the rising share of equity mutual funds such as individual investors showing strong preference for equity-oriented schemes, consistent inflows in equity schemes throughout the year, significant interest of retail investors in thematic/sectoral funds. Shares of debt mutual funds and liquid funds have declined to 14% each as of March 2025 owing to removal of tax benefits, rising interest rates, shift in investor preferences towards equity market, and liquidity needs. Share of ETF funds have witnessed robust increased from 7% as of March 2020 to 1 2% as of March 2025. The growth was led by substantial increase in passive funds AUM, increased adoption among retail investors, cost efficiency, and diversification.
Notes: As per quarterly AUM data. Equity includes equity funds, ELSS, index funds, solution-oriented funds, and balanced funds. Debt funds include gilt, income, conservative hybrid, floater funds, and FoFs investing overseas. ETF includes gold ETFs and other ETFs. Liquid/ money market includes liquid funds, overnight funds, and money market funds; Source: AMFI, CRISIL Intelligence
Net inflows in equity mutual funds increased exponentially by 74% on-year led by robust growth in thematic/ sectoral funds
The mutual funds industry experienced the highest net inflow ever in fiscal 2025 at 8,34,1 05 crore with equity mutual funds getting record inflows of 5,99,275 crore comprising of 72% of total net inflows during the fiscal year. Inflows in equity funds were led by sectoral or thematic equity mutual fund schemes which witnessed inflows of 1,46,656 crore recording a robust 21 8% on-year growth, reflecting the heightened interest of investors in such funds, followed by multi cap funds and small cap funds which received inflows of 42,282 crore and 41,673 crore respectively in fiscal 2025. ETFs experienced 73% on-year growth in inflows at 83,079 crore with growing popularity of passive funds and flows from institutional investors. Debt mutual funds witnessed inflows of 38,654 crore after recording outflows for three consecutive fiscal years. Inflows in debt mutual funds were led by improved liquidity, easing inflation and expectations of rate cut by RBI. Liquid funds experienced inflows of 94,1 07 crore in fiscal 2025 owing to favorable macroeconomic conditions.
Notes: (1) As per quarterly AUM data. Equity includes equity funds, ELSS, index funds, solution-oriented funds, and balanced funds. Debt funds include gilt, income, conservative hybrid, floater funds, and FoFs investing overseas. ETF includes gold ETFs and other ETFs. Liquid/ money market includes liquid funds, overnight funds, and money market funds, (2) Figures in the box represents net inflow for the period; Source: AMFI, CRISIL Intelligence
Quarterly Inflows as per new classification of mutual funds scheme from March 2020 to March 2025 (In crore)
Quarter ended |
Equity | Debt | Hybrid Schemes | Solution Oriented | Others | Total |
Mar-20 |
30,069 | (1,15,098) | (37,206) | 260 | 27,707 | (94,267) |
Jun-20 |
11,379 | 90,536 | 13,213 | 288 | 8,663 | 1,24,079 |
Sep-20 |
(8,883) | 24,726 | (16,340) | 181 | 23,484 | 23,169 |
Dec-20 |
(30,116) | 1,64,692 | (12,863) | 6 | 7,020 | 1,28,738 |
Mar-21 |
(11,707) | (83,754) | 13,055 | 1,102 | 20,063 | (61,242) |
Jun-21 |
15,627 | 6,293 | 27,220 | 222 | 20,262 | 69,625 |
Sep-21 |
35,256 | (10,542) | 41,775 | 189 | 33,296 | 99,974 |
Dec-21 |
40,761 | (21,834) | 20,423 | 390 | 40,489 | 80,229 |
Mar-22 |
62,450 | (1,16,601) | 5,803 | 464 | 44,787 | (3,098) |
Jun-22 |
48,797 | (1,05,055) | 10,084 | 409 | 41,226 | (4,539) |
Sep-22 |
28,902 | (10,567) | (14,436) | 417 | 42,963 | 47,278 |
Dec-22 |
18,758 | (16,394) | (7,041) | 427 | 36,053 | 31,802 |
Mar-23 |
48,319 | (77,044) | (7,420) | 583 | 37,247 | 1,684 |
Jun-23 |
16,427 | 132,477 | 14,021 | 419 | 13,490 | 1,76,833 |
Sep-23 |
41,496 | (70,002) | 48,153 | 479 | 10,115 | 30,240 |
Dec-23 |
52,412 | (36,708) | 38,454 | 748 | 10,553 | 65,459 |
Mar-24 |
71,027 | (60,354) | 44,326 | 638 | 26,532 | 82,169 |
Jun-24 |
94,132 | 1,22,614 | 46,708 | 896 | 41,762 | 3,06,113 |
Sep-24 |
1,09,688 | 50,705 | 32,342 | 687 | 32,631 | 2,26,053 |
Dec-24 |
1,18,929 | 43,231 | 25,357 | 979 | 31,274 | 2,19,769 |
Mar-25 |
93,928 | (80,756) | 14,625 | 730 | 34,653 | 63,180 |
Notes: As per net inflows during quarterly AUM. Open-ended, close-ended and interval funds have been considered. Others include gold ETF, other ETFs, index funds and fund of funds investing overseas. Source: AMFI, CRISIL Intelligence
Maharashtra has the highest share in total mutual fund AUM in India as of March 2025
As per the state-wise/union territory-wise contribution to AAUM of category of schemes for March 2025, top-5 states having majority share of Indian mutual fund AUM are Maharashtra, New Delhi, Karnataka, Gujarat and West Bengal. Maharashtra has the highest share at 40.6% of the total mutual fund AUM of the country with a total of 27,1 0,131 crore AUM, followed by New Delhi at 8.4% with a total of 5,60,430 crore AUM, Gujarat at 7.0% with 4,63,752 crore AUM, Karnataka at 6.9% with 4,57,634 crore AUM and West Bengal at 5.0% with 3,31,059 crore AUM. Together, the top-5 states hold a massive 67.8% of the total mutual fund AUM of the country that amounts to 45,23,006 crore AUM. The states of Maharashtra, Karnataka, Gujarat, West Bengal and New Delhi which include cities such as Mumbai, Pune, Bengaluru, Ahmedabad, Kolkata, Vadodara, etc. serve as major hubs for mutual fund investments as they are driven by factors such as financial prominence (presence of financial hubs, government entities), investor demographics (growth number of retail investors, presence of HNIs, growing investor awareness, greater technological penetration) and historical significance.
EMERGING TRENDS IN INDIAN MUTUAL FUNDS INDUSTRY
Diverse distribution channels driven by technological advancements are on the rise
The distribution landscape of mutual funds in India is undergoing a dynamic transformation, largely driven by technological innovation and evolving customer expectations. Traditional models of mutual fund distribution, reliant on physical branches, bank relationships, and in-person intermediaries, are increasingly being supplemented or replaced by digital-first channels that prioritize convenience, personalisation, and accessibility.
• Digital platforms and mobile apps: Fintech companies have revolutionized mutual funds investing by offering end-to-end digital experiences. These platforms provide services such as e-KYC, paperless onboarding, direct plan access, SIP management, and goal tracking. Their mobile-first approach caters to the rising number of young, tech-savvy investors who prefer to invest on their own via smartphones.
• Integration with payment and super apps: Mutual funds are now being integrated into everyday payment platforms like PhonePe and Google Pay, enabling users to invest without switching apps. These apps leverage existing customer data to offer curated mutual fund recommendations and one-click SIPs, significantly enhancing distribution outreach, especially in Tier 2 and 3 cities.
• Banks and NBFCs going digital: Banks, which have mutual fund distribution through branch networks, are now upgrading their online investment platforms and mobile apps to compete with fintechs. Several banks have launched advanced digital interfaces with mutual fund dashboards, one-click transactions, and integration with savings accounts, offering both convenience and trust.
• Online broking platforms: Several stockbrokers have introduced mutual fund investment options with their trading apps. These platforms are attractive to equity investors looking to diversify into mutual funds without using separate apps.
• Voice and Chatbot-based platforms: AI-powered tools integrated into apps, websites, or platforms now allow investors to interact with mutual fund services via chatbots or voice assistants, providing customer support, scheme suggestions, and transaction options in a conversational interface.
• Regional outreach through vernacular and video content: Customer preferences are shifting toward regional language support, bite-sized video explainers, and interactive tools. AMCs and fintechs are responding by providing educational content in multiple languages, helping to increase awareness and trust in semi-urban and rural areas.
Investors are getting drawn towards thematic/sectoral funds to capitalize on emerging trends and sector- specific growth opportunities
Investors in India are increasingly getting attracted towards thematic/sectoral mutual funds due to their potential to deliver high returns by capitalizing on specific trends, government policies, or economic cycles. For instance, themes like digital transformation, renewable energy, electric vehicles, infrastructure, healthcare, and consumption have gained popularity as they align with Indias evolving economic priorities and policy focus. Investors are also responding to pro-growth government policies such as the PLI schemes, Make in India, Digital India, and infrastructure development plans. These initiatives create tailwinds for specific sectors like manufacturing, capital goods, defence, and technology, making them attractive for thematic investing.
The AUM of thematic/sectoral funds increased from 49,844 crore as of March 2020 to 455,088 crore as of March 2025, growing at an exponential CAGR of 56% during the same period.
Share of passive funds continue to gain traction on account of their increasing popularity
With rising popularity of passive funds in India, and increased awareness amongst investors about passive funds, benefit of lower expense ratio and ease of investment, passive funds AUM has grown at a 1 0-year CAGR of 54.1% between March 201 5 and March 2025. Further, passive funds AUM has grown at a robust 23.7% on-year as of March 2025 alone. This has led to the share of passive funds AUM in total AUM to rise from 1 .2% as of March 201 5 to 1 6.0% as of March 2025. Passive funds, particularly ETFs have sustained asset growth in fiscal 2025, buoyed by increased popularity and institutional investments from entities such as provident funds, which have contributed to the segments expansion.
Note: Passive funds include gold ETFs, other ETFs and Index funds; QAAUM has been considered Source: AMFI, CRISIL Intelligence
Gold ETF outshines among passive funds as gold prices surge
The AUM of Gold ETF in India have experienced a significant surge, reflecting growing investor inclination towards gold as a safe- haven assets. Gold ETF AUM witnessed CAGR of 50.9% between March 2020 and March 2025 to reach 52,714 crore. During fiscal 2025, gold ETF AUM rose by 86% as gold prices reached all-time high. Investors opted for gold ETFs as a more convenient and cost-effective alternative to buying physical gold. Moreover, economic uncertainties, a downturn in local equities in second half of fiscal 2025 and low US bond-yields also prompted investors to diverse their portfolio by increasing allocations to gold ETFs.
Increasing demand for goal-based investing and hybrid solutions has led to the development of more tailored mutual fund schemes
Investors are preferring hybrid mutual fund schemes due to their balanced approach to risk and return, especially in the context of goal-based investing. Hybrid funds invest in a mix of equity and debt instruments, offering growth potential from equities and stability from debt. This suits investors who are cautious about full equity exposure but want better than pure debt funds. During fiscals 2024 and 2025, hybrid mutual funds AUM witnessed on-year growth of 44% and 27% respectively to reach 9,25,682 crore as of March 2025 as investors moved towards hybrid solutions amid market volatility led by geopolitical tensions. The debt component in hybrid funds provided a buffer during market downturns, helping to reduce portfolio volatility and drawdowns. Moreover, hybrid solutions have also gained popularity among investors with medium to long-term financial goals, such as retirement planning or childrens education, due to their balanced risk-return profile.
Note: QAAUM has been considered Source: AMFI, CRISIL Intelligence
Investors are preferring long-term equity and non-equity schemes
Equity schemes having age of more than 24 months had the highest share of AUM of 1 8,96,095 crore as on 31 st March 2025. Long-term equity schemes contributed 55% share in total equity AUM. Several factors such as wealth creation, goal-based investing, changing investment culture, and alignment with financial goals are being tied to long-term investments in equity schemes. Moreover, the rise of SIPs has promoted long-term investing habits by encouraging regular, automated contributions. Investors are also optimistic Indias long-term economic growth potential, demographic dividend, and corporate earnings growth.
Non-equity schemes of age greater than 24 months having a share of 1 3,84,858 crore of AUM was the second highest contributor as investors move towards safer debt mutual funds. During fiscal 2025, investors positioned themselves to benefit from potential interest rate reductions by the RBI. Higher yield spreads and want of stable post-tax returns also contributed towards investments in long-term non-equity funds. Long-term non-equity schemes contributed 44% share in total non-equity AUM.
Individual investors are increasingly entering mutual funds space
Share of retail and HNI investors AUM in overall net mutual funds AUM has increased from 53.7% as on 31 st March 2020 to 62.8% as of 31 st March 2025, with AUM reaching 41,28,925 crore in value. During this period, mutual funds AUM of retail investors grew at CAGR of 28%. The share of retail investors in Indian mutual funds has been rising steadily in recent years due to a mix of financial literacy improvements, digital access, better product offerings, and favourable market conditions. SIPs have become preferred mode for retail investors due to affordability and automation. Mutual fund awareness campaigns have also boosted awareness of mutual funds benefits among middle-income Indians. Moreover, easy access through investing apps and direct AMC portals has made investing paperless, fast, and user-friendly. Even small-town investors now invest via smartphones. Further, robust equity market performance over the past decade has encouraged retail and HNI investors to invest in mutual funds and benefit from long-term
wealth creation
Note: Individual investors include retail investors and HNI investors; Net AUM has been considered Source: AMFI, CRISIL Intelligence
Rising mutual funds penetration in smaller towns owing to investor education initiatives, digital accessibility and increased distribution networks
Mutual funds penetration is rising rapidly in smaller cities in India, driven by digitisation, regulatory support, and increasing financial awareness. These regions, referred to as B30 (beyond top 30 cities), have seen significant surge in investments in mutual funds. Mutual funds AUM in B30 cities grew at a faster pace at 26% between March 2020 and March 2025 as compared to that of T30 cities which witnessed CAGR of 21 % during the same period. This led to share of mutual funds AUM in B30 cities rising from 1 6% as of March 2020 to 18% as of March 2025. Factors such as simplification of investing through mobile apps and fintech platforms, campaign like "Mutual Funds Sahi Hai", expansion of distribution networks by AMCs, and rising incomes and aspirations of people in India have led to mutual funds AUM growing in B30 cities at a faster pace, indicating a deepening financial inclusion across India.
Note: Data pertains to monthly average AUM Source: AMFI, CRISIL Intelligence
SIPs continue to gain popularity due to affordable and disciplined approach to investing
Increased ease of investments, rising mutual fund distributors, digital investment platforms and increased awareness have led SIPs to surge exponentially in the past few years. Infact, SIPs have also become the mainstream investment tool for first-time investors starting their investment journey in mutual funds. Several benefits accrue from SIPs, such as avoidance of behavioral bias during uncertain periods, aggregation of a high number of small amounts of investments, and certain tax benefits in ELSS. SIPs have helped grow, balance net inflow and reduce volatility in the aggregate inflows.
The number of SIP accounts increased from 3.1 crore as of March 2020 to 1 0.1 crore as of March 2025, growing at a CAGR of 26.4%. Moreover, SIP contribution during fiscal year 2025 reached 2,89,352 crore from 1,00,084 crore in fiscal 2020, thereby recording a CAGR of 23.7%. Fiscal 2025 alone witnessed an exponential on-year growth of 45.2% in SIP contribution. Popularity of equity funds, rising participation of investors, recent investor education initiatives, and apparent benefits of SIPs to households that traditionally did not invest in mutual funds indicate that growth in inflows from SIPs is expected to accelerate over the foreseeable future. This has made SIPs an increasingly important component in overall AUM growth.
Source: AMFI, CRISIL Intelligence
Increased mutual funds awareness and digital platforms are driving growth of direct plans
The growth of direct plans has accelerated significantly in recent years, driven by several key factors that appeal to cost-conscious, digital savvy, and informed investors. Investors today are more financially literate and aware of the cost implications of different fund options. Fintech apps have also made it extremely easy for individuals to invest in direct plans with just a few clicks. Moreover, SEBI has pushed for greater transparency in mutual fund costs, requiring fund houses to clearly disclose returns and expenses for both direct and indirect plans. This has empowered investors to make informed decisions and recognize the long-term advantages of direct plans. As of March 2025, AUMs under direct plans represented 47.0% of the aggregate industry AUM, up from 45.4% share as of March 2020. Going forward, as digital adoption and financial literacy continue to improve, especially among young investors, the share of direct plans in total mutual fund investments is expected to keep rising steadily.
Note: Based on monthly average AUM; Source: AMFI, CRISIL Intelligence
Rising popularity of direct plans among individual investors
As of March 2025, 77.0% of total institutional investors monthly average AUM accounted for investments through direct plans (up from 74.0% on 31st March 2020), whereas 27.3% of total individual investors monthly average AUM accounted for investments through direct plans (up from 19.2% as of 31st March 2020). The growing popularity of direct plans among individual investors can be attributed to various campaigns and investor education initiatives undertaken by the mutual industry. The share of direct plan is expected to gradually increase further going forward, on account of investors looking to reduce costs as compared to investing through regular plans.
Regular and direct plans split for individual and institutional investors AUM |
||||||||
Mar-20 |
Mar-25 |
|||||||
(In cr) |
Regular plans |
Direct plans |
Total | Mix of direct plan in total AUM | Regular plans |
Direct plans |
Total | Mix of direct plan in total AUM |
Individual investors |
10,42,261 | 2,48,071 | 12,90,332 | 19.2% | 29,28,399 | 11,02,338 | 40,30,738 | 27.3% |
Institutional investors |
3,06,695 | 8,73,855 | 11,80,550 | 74.0% | 6,07,217 | 20,32,231 | 26,39,448 | 77.0% |
Total |
13,48,956 | 11,21,926 | 24,70,882 | 45.4% | 35,35,616 | 31,34,570 | 66,70,186 | 47.0% |
Note: Based on monthly average AUM.
Source: AMFI, CRISIL Intelligence
REGULATORY CHANGES IN INDIAN MUTUAL FUNDS INDUSTRY
Disclosure of the holding details of designated persons of AMCs, trustees and their immediate relatives
In November 2022, SEBI issued notification for inclusion of mutual fund units in SEBI (Prohibition of Insider Trading) Regulations 201 5 to strengthen the regulatory framework of PIT. Further, in October 2024, SEBI issued another notification as per which AMCs will have to disclose the holding details of designated persons of AMCs, trustees and their immediate relatives on quarterly basis starting from 1st November 2024. AMCs are therefore required to establish institutional mechanisms to monitor and prevent insider trading, including robust policies and whistleblower system. AMCs are also required to maintain digital database of all disclosures, which should be preserved for a minimum of five years. Compliance officers within AMCs are tasked with monitoring trades and ensuring adherence to the regulations. Mandatory reporting of mutual fund holdings would increase accountability and prevent misuse of any price sensitive information. It would also bolster investor confidence by ensuring that all stakeholders operate on a level playing field, thereby mitigating the risk of insider trading in mutual fund units.
Amendments in the seventh schedule of SEBI (Mutual Funds) Regulations, 1996
In July 2024, SEBI amended the restrictions on investments under the seventh schedule of SEBI (Mutual Funds) Regulations 1 996. The said regulation restricts mutual fund schemes in making investments in listed securities of group companies of the sponsor in excess of 25% of net assets. However, the latest amendment has placed investments by equity-oriented ETFs and index funds as an exception to the above rule but with an overall cap of 35% of net asset value of the scheme. By capping exposure, this regulation has mandated AMCs to rebalance portfolios of affected schemes and reduce the risk of over-concentration in sponsor group securities, safeguarding investors. The amendments were made as part of SEBIs ongoing efforts to ensure that mutual fund investments are made in the best interests of investors, with enhanced oversight and reduced potential for conflicts of interest.
SEBI permits Indian mutual funds to invest in overseas mutual funds that have upto 25% exposure to Indian securities
To facilitate ease of ease of investment and transparency related to investments in overseas mutual funds, SEBI issued a circular in November 2024 as per which Indian mutual funds have been allowed to invest in overseas mutual funds that have total exposure to Indian securities not exceeding 25% of their assets. This will increase the administrative responsibility for funds to comply with monitoring and reporting investments. Moreover, investment opportunities may narrow for funds heavily inclined towards Indian securities.
Key highlights of the SEBIs circular:
• I ndian mutual funds or unit trusts can invest in overseas mutual funds, provided these foreign funds do not allocate more than 25% of their assets to Indian securities.
• All investor contributions must be pooled into a single investment vehicle, ensuring no side vehicles or segregated portfolio. This structure guarantees that all investors have equal and proportionate rights in the fund.
• To avoid potential conflicts, SEBI has prohibited advisory agreements between Indian mutual funds and the underlying overseas mutual funds.
• I f, after investment, the overseas mutual funds exposure to Indian securities exceeds the 25% threshold, Indian mutual funds are granted a six-month observance period to monitor and ensure rebalancing. During this period, no new investments can be made in the concerned overseas fund.
SEBI has mandated disclosure of expenses, half yearly returns, yield and risk-o-meter of mutual funds schemes
In November 2024, the SEBI introduced comprehensive disclosure requirements for mutual funds, effective from 5th December 2024. These mandates aim to enhance transparency, enabling investors to make more informed decisions. Key disclosure requirements include:
• Mutual funds must distinctly disclose total recurring expenses, half-yearly returns, and annualized yields for both direct and regular plans.
• The Association of Mutual Funds in India (AMFI), in collaboration with SEBI, will develop standardised formats for these disclosures. This standardisation ensures consistency across all mutual fund schemes, facilitating easier comparison for investors.
• SEBI has revamped the existing risk-o-meter by introducing a color-coded system to virtually represent the risk levels of mutual funds schemes. This color-coding will be incorporated into all scheme-related documents and promotional materials, aiding investors in quickly assessing the risk profile.
• Any alteration in a schemes risk level must be promptly communicated to investors through notices, emails or SMS.
Inclusion of Mutual Funds Lite (MF Lite) Framework by SEBI
In December 2024, the SEBI introduced the MF Lite Framework, a streamlined regulatory regime specifically designed for passively managed mutual fund schemes, such as ETFs and index funds. This initiative aims to simplify entry processes, reduce compliance burdens, and encourage the growth of passive investment products in India. The Framework has kept lower entry barriers for sponsors and AMCs, simplified eligibility criteria for sponsors, streamlined compliance and governance such as trustee responsibilities and reporting requirements, phased implementation of the framework, and flexibility for existing AMCs to hive-off their passive schemes to a different group entity. The MF Lite Framework is poised to enhance the passive investments landscape in India by encouraging new entrants, promoting cost effective investment options, and fostering innovation.
Regulatory framework of Specialized Investment Funds (SIFs)
In February 2025, SEBI introduced the Specialized Investment Funds (SIFs) framework, effective from 1st April 2025. This initiative aims to bridge the gap between traditional mutual funds and portfolio management services (PMS), offering sophisticated investment strategies within a regulated mutual fund structure. SIFs are a new category of mutual funds designed to provide more flexible and complex investment strategies, such as long-short positions in equity and debt, sector rotation, and hybrid asset allocation. They cater to high-net worth individuals (HNIs), accredited investors, and institutions seeking advanced portfolio management within a regulated framework. SIFs offer a middle ground between traditional mutual funds and PMS, providing access to complex investment approaches within a mutual fund structure, enhanced investor protection compared to PMS, and lower entry barriers with minimum investment of 10 lakh, compared to 50 lakh for PMS.
INDUSTRY OUTLOOK
Growth of AUM to continue at CAGR 16-18% between fiscal 2025 and fiscal 2030
In the long term, i.e., between fiscal 2025 and fiscal 2030, the overall industrys AUM is projected to sustain a high growth trajectory of 16-18% CAGR, reaching approximately 150 lakh crores. This growth in the mutual fund industry is expected to be driven by:
• Rising retail participation: Growing awareness and ease of digital access are bringing more investors from tier 2 and 3 cities
• SIP culture deepening: Monthly SIP inflows are consistently hitting record highs, ensuring steady long-term growth
• Shift from traditional investments: Low returns in traditional investments are pushing investors towards market-linked options
• Indias economic growth: A robust GDP outlook supports long-term equity market performance, boosting equity fund appeal
• Increasing financial literacy: AMFI and fintech-led education initiatives are demystifying mutual funds for the masses
• Government & regulatory support: SEBI and RBI initiatives are promoting transparency, safety, and investor trust
• Product innovation: Rise of index funds, target maturity funds, and hybrid solutions tailored for diverse goals
• Tax efficiency: Equity and hybrid mutual funds offer better post-tax returns compared to many traditional products
• Digital distribution growth: Several digital platforms are simplifying mutual funds investing
• Rising middle-class and disposable income: Higher savings and long-term financial planning will drive AUM expansion
Note: P: Projected; AUM is the average of last quarter for each Fiscal, AUM excluding FoFs — domestic but including FoFs— overseas;
Source: AMFI, CRISIL Intelligence
Equity AUM to grow at 21-22% between fiscal 2025 and fiscal 2030
In fiscal 2025, the quarterly average equity AUM grew by 29.2% on-year to reach 40.37 lakh crore after a robust 42.2% on-year growth in fiscal 2024. Equity AUM is expected to grow at 21-22% CAGR, the second fastest growth amongst all MF categories, over March 2025 to March 2030. ETFs are expected to grow marginally faster than equity mutual funds over the next 5 years, as passive investing continues to grow in popularity.
Note: P: Projected, As per quarterly average AUM; equity includes equity funds, ELSS, index funds, solution-oriented funds and balanced funds AUM excluding Fund of Funds — Domestic but including Fund of Funds — Overseas; Source: AMFI, CRISIL Intelligence
In fiscal 2025, the debt mutual funds sector experienced a moderate recovery, reversing the net outflows observed in previous fiscal years. The outlook for debt mutual funds in India is cautiously optimistic, supported by macroeconomic trends, structural reforms, and evolving customer behavior. Over March 2025 to March 2030, the segment is expected to grow at a double-digit rate of 12-13% CAGR driven by rising demand for fixed-income solutions, institutional flows, product innovation, and moderate returns as inflation stabilizes and interest rates decline.
The quarterly average liquid/money market funds grew by 26.0% in fiscal 2025 as segment witnessed second highest net inflows. The segment is expected to grow at approximately 9-10% CAGR between March 2025 to March 2030, driven by favorable interest rates and investor demand for low-risk short-term instruments.
Trend in AUM as well as growth across mutual fund segments till March 2030 (In lakh crore)
| FY 20 |
FY 21 |
FY 22 |
FY 23 |
FY 24 |
FY 25 |
YoY growth (Mar 22- Mar 23) | YoY growth (Mar 23- Mar 24) | YoY growth (Mar 24- Mar 25) | Mar- 30P |
CAGR (FY 2530) | |
Equity |
11.3 | 13.6 | 19.2 | 22.0 | 31.2 | 40.4 | 14.6% | 42.2% | 29.2% | 106.9 | 21.5% |
Debt |
8.0 | 10.2 | 8.0 | 6.1 | 8.9 | 9.7 | -23.5% | 44.1% | 9.5% | 17.4 | 12.4% |
Liquid / Money |
6.0 | 5.5 | 7.0 | 7.3 | 7.4 | 9.3 | 3.7% | 0.8% | 26.0% | 14.5 | 9.3% |
ETFs |
1.8 | 2.9 | 4.1 | 5.1 | 6.7 | 8.1 | 23.4% | 31.0% | 20.9% | 21.4 | 21.6% |
Total |
27.0 | 32.1 | 38.4 | 40.5 | 54.1 | 67.4 | 5.6% | 33.6% | 24.6% | 160.3 | 18.9% |
Note: P: Projected; As per quarterly average AUM. Equity includes equity funds, ELSS, index funds, solution-oriented funds, and balanced funds. Debt funds include gilt, income, conservative hybrid, floater funds, and FoFs investing overseas. ETF includes gold ETFs and other ETFs. Liquid/ money market includes liquid funds, overnight funds, and money market funds.
Note: P: Projected, the data is as per quarterly average AUM. Equity includes equity funds, ELSS, index funds, solution-oriented funds, and balanced funds. Debt funds include gilt, income, conservative hybrid, floater funds, and FoFs investing overseas. ETF includes gold ETFs and other ETFs. Liquid/ money market includes liquid funds, overnight funds, and money market funds. Source: AMFI, CRISIL Intelligence
Mutual Fund Industry revenues to grow at 15-16% CAGR and PAT to grow at 18-19%
In fiscal 2025, asset management companies of India are estimated to have recorded profits at 17,500 crore as against 14,400 crore in fiscal 2024, which is around 21 -22% on-year growth. Revenues are also estimated to have risen at 22-23% to reach 30,950 crore in fiscal 2025. Going forward, with increasing financial literacy, digital penetration, and favourable regulatory framework, AMCs are well positioned for sustained growth in revenue and profitability. Moreover, AMCs are expanding their product offerings, including passive funds, to cater to diverse investor needs. Further, focus on technology and process optimisation is expected to enhance operational efficiency, contributing to better margins. Due to this, we expect the industrys revenue to clock a CAGR of 1 5-1 6% to approximately 62,000-63,000 crore and industrys profit after tax to grow at CAGR of 1 8-1 9% to approximately 40,000-41,000 crore by fiscal 2030.
Note: E: Estimated; P — Projection.
Source: AMC annual reports, CRISIL Intelligence
KEY GROWTH DRIVERS & ENABLERS
India is expected to remain one of the fastest growing economies in the world
Indias economic growth in the next fiscal is expected to be driven by a host of factors including budgetary support from the government, strengthening of domestic economic activities, improvement in household consumption, improved business sentiments, rising consumer confidence, healthy balance sheet of banks and corporates, and rising integration in global supply chain. As per the MPCs Monetary Policy Statement 2025-26 dated 9th April 2025, the real GDP growth in fiscal 2026 is expected to be 6.5%.
Note: For India, Real GDP growth rate is as of fiscal 2025
Source: IMF (World Economic Outlook - April 2025 update), CRISIL Intelligence
Demographics profile to aid folio growth in capital markets
India has one of the largest young populations in the world, with a median age of 28 years. Of Indias population, more than 60% is in the working age group, which is 19-59 years of age, and is expected to remain above 60% for one more decade. Approximately 90% of Indians are expected to be below the age of 60 in calendar year 2021 and that 63% of them are between 15 and 59 years. In comparison, in calendar year 2020, the United States (US), China and Brazil had 77%, 83% and 86%, respectively, of their population below the age of 60.
Further with regards to long-term investment products, the increase in life expectancy and aspirations of the working population (for example, the need to build a strong corpus before retirement) is also increasing, leading to more focus on equity investments in capital markets.
Digitisation is transforming the Indian mutual funds industry by enhancing efficiency, accessibility and investor engagement
Digitisation is significantly transforming the Indian mutual funds industry across the value chain from distribution and onboarding to operations, compliance, and investor engagement. Key ways in which it is reshaping the sector includes:
• Investor onboarding & e-KYC has simplified account opening process: Investors can now complete KYC verification digitally through Aadhaar-based authentication and centralized KYC systems. Moreover, video KYC, enabled by SEBI and AMFI, reduces paperwork and physical presence. Digital KYC also involves acceptance of officially valid document through technologically assisted facilities like Digilocker, biometric Aadhaar, time stamping, geolocation tagging to ensure physical location being in India and liveliness check. In e-KYC process, the documents also are e-signed.
• Online investing platforms are offering seamless interface to investors: Several AMCs and fintech platforms provide easy access to mutual funds through their website and mobile app which has increased the outreach in the country. These online platforms allow investors to browse, compare, and invest in multiple funds instantly. Moreover, investors get realtime dashboards showing their fund performance, asset allocation, and gain/loss tracking. These platforms further send autoreminders, SIP tracking, and portfolio updates through notifications, thereby reducing the need for active monitoring by investors.
• Digital tools have enabled mutual distribution in B30 cities: Online investing apps and platforms have empowered investors in smaller cities to invest in mutual funds using only a smartphone and internet connection. Regulatory support from SEBI and AMFI has also complemented this growth by encouraging digitisation. As a result, mutual fund adoption in smaller cities is rising, with increasing SIP registrations from B30 cities.
• Robo-advisory services powered by AI: Robo-advisory is reshaping the way investors engage in mutual funds. These digital advisory platforms, powered by AI, provide automated, algorithm-driven financial planning and investment management without significant human intervention. By analysing investors profile such as income, age, financial goals, and risk appetite, robo-advisors suggest suitable mutual fund portfolios tailored to individual needs. This use of AI not only personalizes investment advice but also makes it more accessible and affordable, particularly for first-time investors.
Mutual funds awareness campaigns are leveraging digital channels to drive participation across the country Digital campaigns like "Mutual Funds Sahi Hai", initiated by AMFI, have played a pivotal role in increasing awareness and participation in mutual funds across the country. Launched in 201 7, the campaign leverages digital channels such as YouTube, Instagram, Facebook, Twitter and Google ads to educate the public about benefits, accessibility and long-term wealth-building potential of mutual funds investments. By simplifying complex financial concepts through short videos, infographics, and influencer collaborations, the campaign has successfully broken down psychological and knowledge barriers for first-time investors.
The use of regional languages and localized messaging has helped the campaign resonate with audiences beyond urban centres. Through storytelling and relatable life scenarios, it addresses common myths and fears around investing like risk perception, market volatility, and lack of knowledge, making mutual funds more approachable to the Indian population. This has led to growing engagement from Tier 2 and 3 cities, where financial awareness was historically low.
Social media plays a central role in the campaigns virality. Short reels, testimonials, and goal-based investing stories are shared widely, reaching younger audiences and working professionals. The hashtag #MutualFundsSahiHai has become synonymous with trust and simplicity in investing. Influencers and financial educators have also amplified the campaigns reach, using their platforms to spread educational content aligned with AMFIs guidelines.
Digital campaigns like these are not only driving awareness but are also leading to rising SIP accounts, increasing mutual funds folio growth, and higher digital transactions.
Increasing Share of Non-Institutional and Retail Investors to drive growth for the industry
Individual investors (i.e., excluding promoters and institutions) ownership in NSE listed companies has increased steadily over the years, reflecting growing confidence in Indian equity markets. In terms of market capitalization, the value of individual investors direct equity ownership in NSE listed companies has grown at a CAGR of ~34% between March 2020 and March 2025. From March 2020 to March 2025, overall retail mutual fund AUM and retail equity mutual fund AUM increased at a CAGR of 23% and 28% respectively. Going forward, significant potential is expected for direct equity investments as the total addressable market including mutual fund folios has seen significant growth in recent times. Moreover, with the increase in financial literacy of investors, equity ownership is expected to see an increase in the future.
Note: Retail direct equity ownership is computed basis market capitalisation of NSE companies and overall shareholding patterns; Net
Mutual Fund AUM as of March 2020 and December 2025 is considered
Source: NSE Market Pulse, AMFI, India Ownership Tracker (NSE), CRISIL Intelligence
Indias growing middle class, coupled with higher per capita income, will continue to propel investments in mutual funds
Indias nominal GDP per capita has witnessed 5-year CAGR of 9.0% since fiscal 2020 and is further projected by the International Monetary Fund (IMF) to cross 4 lakh by fiscal 2030, thereby registering a CAGR of 1 1 .2%. This reflects robust economic growth and the governments continued endeavour to make the country an upper middle-income economy.
Note: P — projected. (^) Nominal GDP per capita as per the Second Advance Estimates of National Income, 2024-25 Source: Ministry of Statistics and Program Implementation (MoSPI), International Monetary Fund (IMF), CRISIL Intelligence
With Indias rapidly rising middle class, aspirations are shifting from merely saving to structured investing, particularly towards mutual funds which offer an accessible, regulated, and goal-oriented way to participate in the capital markets. The middle class, which comprises of majority of the Indian population, is increasingly seeking avenues that go beyond traditional instruments like fixed deposits, gold and real estate. This demographic is becoming more financially aware and digitally connected, which makes them more open to exploring mutual funds through SIPs, tax-saving schemes such as ELSS, and retirement-focused solutions. With growing urbanisation, access to smartphones, and a rising culture of financial planning among young professionals, mutual finds are emerging as a preferred tool for wealth creation among middle-income households.
Rise of goal-based mutual funds investing in India
The rise of goal-based mutual funds investing marks a significant shift in how Indian investors are approaching wealth creation. Traditionally, investments were made with an objective of gaining short-term and long-term returns. Today, more investors are aligning their mutual funds investments with specific life goals such as buying a house, funding childrens education, planning for retirement, saving taxes, or achieving financial independence. This transformation is fuelled by increasing financial literacy, digital tools, and advisory platforms that emphasize the importance of goal-oriented planning. Investors are now segmenting their mutual fund portfolios based on time horizons and the nature of their goals. For instance, equity mutual funds are increasingly being used for long-term objectives like wealth creation, retirement, and buying a house, while debt funds and ELSS are favoured for short-term needs and tax-saving under Section 80C of the Income Tax Act. In essence, the rise of goal-based mutual fund investing is fostering a more informed, committed, and forward-looking investor base in India, one that views mutual finds not just as an investment product, but as a strategic means to fulfil life aspirations.
Rise in 4G & 5G penetration and smartphone usage to facilitate ease of investing in mutual funds through digital platforms
Technology is conducive for India, considering its demographic structure where the median age of 25 years. The young population is tech savvy and at ease with using it to conduct the entire gamut of financial transactions. With increasing smartphone penetration and faster data speed, consumers are now encouraging Digitisation as they find it more convenient. Digitisation is expected to help improve efficiency and optimise costs. Players with better mobile and digital platforms are expected to draw more customers and emerge as winners in the long term.
Mobile penetration: Higher mobile penetration, improved connectivity, and faster and cheaper data speed, supported by Aadhaar and bank account penetration, have led India to shift from being a cash-dominated economy to a digital one.
Note: E - estimated, P - projected Source: CRISIL Intelligence
India had 1,1 50.66 mn wireless subscribers at the end of 31st December 2024. The reach of mobile network, internet and electricity is continuously expanding the subscriber footprint to remote areas, leading to rising smartphone and internet penetration in India. Internet subscribers in India have risen sharply from 422 mn as of 31st March 2017 to 970 mn as of 31st December 2024, at a CAGR of 11.3%. In terms of 3-year CAGR, internet subscribers in India have risen at 5.4% between 31st December 2021 and 31st December 2024. In terms of internet subscribers per 100 population, the number more than doubled from 32 as of 31st March 201 7 to 67 as of 31 st December 2024. With launch of 5G services in India, digital transformation and connectivity is propelling to new heights.
Average wireless data usage per month per subscriber has trended up over the past eight years. Per subscriber per month data usage increased from 0.1 gigabyte (GB) as of 31 st March 201 5 to 1 4.97 GB as of 31 st December 2024 thanks to increasing internet data penetration in India.
KEY CHALLENGES TO THE INDUSTRY
Increase in taxation on short-term and long-term capital gains
In the Union Budget 2024, the government introduced significant changes to the taxation of capital gains from equity-oriented mutual funds, effective from July 2024. The taxation on Short-Term Capital Gains (STCG) was increased from 1 5% to 20% whereas the taxation on Long-Term Capital Gains (LTCG) was increased from 10% to 12.5% on gains exceeding 1 .25 lakh. The investors will now incur increased tax on both STCG and LTCG from equity mutual funds. Moreover, the indexation benefit, which adjusted the purchase price of assets for inflation, has been eliminated from all asset classes. This will lead to investors reassessing and rebalancing their portfolios to align with the new tax regime. However, the widened gap between STCG and LTCG rates may encourage investors to adopt a longer holding period to benefit from lower tax rates.
Market volatility owing to geopolitical events
The equity market reacts sharply to global uncertainties. Geopolitical events such as elections, trade disputes, military conflicts, and diplomatic tensions, can contribute to market instability. The sentiments surrounding elections can introduce significant volatility in the capital markets as witnessed in the latest US Presidential elections wherein the investors reacted severely to the appointment of the new President, significant policy changes post elections and their implications for different sectors and industries, leaving stock markets highly volatile. Furthermore, persistently high inflation, which has been a significant challenge for India and global economies, can further exacerbate market volatility. This increased volatility highlights the importance of long-term investment strategies, diversification, and professional fund management to weather the market turbulence. During heightened market volatility, investors often move towards gold and safe-haven assets. Geopolitical risks often boost gold prices, benefiting gold mutual funds and gold ETFs.
Investments remain low in B30 cities owing to unawareness/understanding of mutual funds
While financial literacy has improved, investments from B30 cities remain low as significant portion of population remains unaware of mutual fund products, their risks and benefits. Many investors lack awareness of SIPs, risk-return profiles, and types of mutual funds such as debt, equity or hybrid. Some investors also tend to equate mutual funds with stock market speculation. Another hurdle in smaller cities is the preference of investors towards traditional investments such as deposits, gold, real estate, insurance policies, etc. Mutual funds are often perceived as risky and complex in comparison to these traditional instruments. Another challenge is the lack of trust in digital investment platforms and intermediaries owing to lower financial education. Fear of fraud or mis-selling deters such people from trying new financial products. Lastly, while mobile penetration is high, digital literacy is still catching up in smaller cities. Many are not comfortable with online KYC, app-based investing, or even UPI-based transactions, which mutual funds have been using to increase penetration.
High interest rates will continue to pose a challenge for debt mutual funds in short-term
Interest rate hikes affect both debt and equity markets. High interest rates affect performance of the debt mutual funds, investor sentiment, and fund strategies. Higher interest rates also make bank FDs and small savings schemes more attractive due to guaranteed
returns and no market volatility. This pulls retail money away from debt mutual funds, especially from conservative investors. The Reserve Bank of Indias (RBIs) Monetary Policy Committee ("MPC") kept raised policy rates by 40 bps in May 2022. This was followed by 50 bps in June 2022, 50 bps in August 2022, 50 bps in September 2022, 35 bps in December 2022 and another hike of 25 bps in February 2023, thus bringing the repo rate to 6.5%. The policy rates remained unchanged as of fiscal 2024. However, in February 2025, the RBI cut the rate by 25 basis points for the first time since 2023, followed by another rate cut by 25 basis points in April 2025 and then followed by another rate cut in June 2025 by 50 basis points, bringing the repo rate to 5.5%. The rate cuts were influenced by escalating global tensions, slowdown in economic growth and inflation ease-off. Reducing repo rate will revive returns of debt mutual funds which will restore investor confidence.
Competition from other financial instruments such as Direct Equity investments, ULIPs, fixed deposits and gold
The Indian mutual funds industry faces stiff competition from traditional financial assets such as fixed deposits, gold, Public Provident Fund (PPF), small savings schemes, and life insurance products. Among these, fixed deposits continue to be one of the most preferred instruments due to their perceived safety and guaranteed returns especially among older and conservative investors. The dual benefit of life cover and long-term savings in insurance policies such as ULIPs often appeals to middle-income families, especially in tier-2 and tier-3 cities where financial literacy is still developing. But ULIPs have higher costs due to the insurance component and returns may be potentially lower and subject to market risks. Physical assets like gold and real estate, which have deep cultural and emotional connects in Indian households, often take priority over financial products like mutual funds. Direct equity investments offer higher potential returns at the risk of higher volatility, higher requirement of product understanding and higher risk appetite. However, mutual funds, with their professional management, diversification, wide product choice, risk diversification, investor education and technology adoption continue to be competitive with other investment vehicles.
EQUITY MARKET PERFORMANCE IN INDIA & OUTLOOK FOR FISCAL 2026
Indias stock market in fiscal 2025 exhibited a mixed performance, characterised by significant volatility influenced by both domestic and global factors. The NSE Nifty 50 index concluded fiscal 2025 with a modest gain of 5.3% on-year, while the BSE Sensex rose by 5.1% on-year. The fiscal year was marked by a strong first half, where NIFTY 50 surged 1 6%, reaching an all-time high of 26,277.35. However, the second half saw a 9% decline, attributed to subdued corporate earnings, foreign fund outflows, and global economic uncertainties.
Despite net foreign investors outflow of 1,27,041 crore from equity market of India in fiscal 2025, there was a notable reverse in March 2025, with foreign investors injecting significant amount. This influx contributed to the NIFTY 50 rising by 6% in March 2025 on month-on-month basis, marking its best monthly performance in last 15 months.
CRISIL Intelligence expects equity fund AUM to grow in double-digits in the long term as government policies and positive economic growth are expected to keep the investors sentiments upbeat.
FIXED INCOME MARKET PERFORMANCE IN INDIA & OUTLOOK FOR FISCAL 2026 ^
The yield on the 10-year benchmark G-sec (semi-annualised) averaged 6.67% in March. Expectations of rate cuts in 2025 by the Reserve Bank of India (RBI), record high foreign portfolio investment (FPI) inflows in debt in March 2025 and softer crude oil prices were the key factors behind lower yields. Yields are expected to ease in fiscal 2026 driven by RBI rate cuts, softer retail inflation and ;
softer crude oil prices. At least two more rate cuts of 25 bps each are expected by March 2026 in our base case scenario, given softer inflation. However, volatility in the global market and the fallout of the US tariff hikes could impact the timing and quantum of rate cuts.
CPI-based inflation is expected to ease to an average of 4.3% in fiscal 2026 from 4.6% in fiscal 2025. Crude oil prices are expected to decline to an average of $70-75 per barrel in fiscal 2026 from $78.8 per barrel in fiscal 2025. That said, an increase in gross market borrowings will exert mild upward pressure on yields. The governments gross market borrowings via dated securities are budgeted to rise to 1 4.8 lakh crore in fiscal 2026 from 1 4 lakh crore in fiscal 2025. Hence, lower interest rates, inflation and fiscal deficit target is expected to bring down the yield on the 1 0-year government security to 6.4% by March 2026 from 6.67% in March 2025.
The inclusion of Indian government bonds in several major global bond indices marks a milestone in the internationalisation of Indias debt market. Prominent global index provider JP Morgan included Indian Government Bonds in its Government Bond Index-Emerging Markets (GBI-EM) in June 2024. Indian governments Fully Accessible Route (FAR) bonds, debuted on Bloombergs Emerging Markets Local Currency Government Indices (EM-LCGI) on 31st January 2025, while FTSE Russell will include Indian G-secs in its Emerging Markets Government Bond Index from September 2025. The inclusion of Indian government bonds in these global bond indices reflects growing investor confidence in Indias macroeconomic stability, regulatory reforms, and the depth of its sovereign bond market.
Overall, fiscal 2026 presents a constructive outlook for Indias fixed income market, characterised by supportive monetary policy, fiscal consolidation, and increased global participation.
Disclaimer
For the preparation of this report, CRISIL Intelligence has relied on third party data and information obtained from sources which in its opinion are considered reliable. Any forward-looking statements contained in this report are based on certain assumptions, which in its opinion are true as on the date of this report and could fluctuate due to changes in factors underlying such assumptions or events that cannot be reasonably foreseen. This report does not consist of any investment advice and nothing contained in this report should be construed as a recommendation to invest/disinvest in any entity. This industry report is intended for use only within India.
COMPANY OVERVIEW
Business Overview
UTI Asset Management Company Limited (UTI AMC) is a key player in Indias asset management landscape, managing total Assets Under Management (AUM) of 21 .05 lakh crore as of 31st March 2025. Our mutual fund business ranks seventh in the country, with a Quarterly Average AUM (QAAUM) of 3.40 lakh crore. Backed by a legacy of over six decades, we continue to focus on becoming the asset manager of choice by offering a broad suite of investment products built to meet the evolving needs of our diverse investor base.
Risk Management
We follow a structured approach to identify and manage risks across the organisation. Our comprehensive risk management framework clearly defines the responsibilities at each level of management. All inherent risks are regularly reassessed, monitored, and reported to the management on periodic basis. Mitigation strategies are formulated by evaluating the likelihood and impact of each risk. In coordination with the management and the Risk Management Committee, emerging and evolving risks are reviewed periodically to ensure timely implementation of effective control measures.
Internal Control Systems and Adequacy
Our internal controls are designed to align with our business requirements and comply with applicable regulatory standards, enabling efficient and seamless operations. These controls play a vital role in safeguarding assets, preventing and detecting errors or fraud, and ensuring the accuracy and reliability of our financial reporting. The Audit Committee and the Board provide oversight to ensure that processes are properly authorised, documented, and regularly monitored. Additionally, our operations are supported by advanced infrastructure and automated systems for accounting and management information, enhancing both accuracy and efficiency.
Operational Performance Mutual Fund
As of 31 st March 2025, UTI AMC is responsible for managing 81 mutual fund schemes in India, which include Equity, Fixed Income, Liquid, Hybrid & Solutions, ETFs and Index Funds. The total Quarterly Average Assets Under Management (QAAUM) for all of these schemes is 3.40 lakh crore.
Portfolio Management Services
Our Portfolio Management Services (PMS) business, launched in 2004, remains a key offering for our valued clients. As of 31st March 2025, the PMS business managed total Assets Under Management (AUM) of 13.78 lakh crore across discretionary and non-discretionary mandates. Our objective is to deliver tailored investment solutions that align with each clients risk profile and return expectations, using research-driven valuation and security selection methods. As of March 2025, the corpus of the Employees Provident Fund Organisation (EPFO) and the Coal Mines Provident Fund Organisation (CMPFO) was managed under discretionary mandates, while the corpus of Directorate of Postal Life Insurance (PLI) was managed under a non-discretionary mandate.
Human Resources
At UTI AMC, we follow a structured and competency-based selection process designed to align candidates with the specific skill requirement of their roles. Post-recruitment, we provide comprehensive development programmes that encompass training, access to key resources and mentorship-ensuring that new team members are well-equipped to grow, contribute and succeed in their roles. We place a strong emphasis on fostering diversity through our recruitment approach, considering factors such as age, cultural background and cross industry experience. Gender diversity remains a focus area-reflected in our recent cohort of management trainees, where women constitute 17% and in our overall workforce, where women represent 26%. This inclusive strategy contributes to a dynamic workplace environment that encourages creativity, broadens perspectives and supports well-informed decision-making. We consider employee skill development and continuous learning to be an integral to enhancing our organisational capabilities. From the outset, we invest in comprehensive training and development initiatives, covering leadership, process excellence, product knowledge and regulatory compliance. These programmes not only foster individual career growth but also contribute to building a skilled, future ready workforce that drives sustained organisational success.
Our commitment to employee development ensures that individuals are not only well-equipped for their current roles but are also prepared to take on future responsibilities within the organisation. To enhance the learning experience, we have adopted advanced digital tools, including Reality Blended Learning Programmes and a mobile-friendly Learning Management System (LMS) that facilitates on-demand learning through customised learning paths. Additionally, we offer specialised programmes tailored for senior leadership and key business teams, with a focus on building AI-driven decision-making capabilities and future ready competencies.
We value the potential and dedication of our people and place a strong emphasis on skill development as a driver of internal growth. This focus has significantly enhanced internal mobility, enabling more employees to advance into leadership positions. By proactively identifying and nurturing talent from within, we foster a culture that promotes growth, rewards loyalty and supports longterm performance excellence.
As of 31st March 2025, UTI AMC has a total workforce of 1,526 Employees.
Financial Performance Review Consolidated Financial Performance Review
Particulars |
FY 2024-25 | FY 2023-24 |
Current Ratio |
10.46 | 13.29 |
Operating Profit Margin (%)1 |
44.11 | 35.95 |
Net Profit Margin (%)2 |
39.33 | 43.91 |
Return on Equity (%)3 |
16.28 | 18.55 |
Operating Profit Margin indicates Core Profit Before Tax to Core Income: The primary reason for increase in Operating profit margin is increase in Management fees i.e core income.
2
Reason for decrease in Net Profit Margin: The primary reason for the decrease in Net profit margin is decrease in profit after tax attributable to the group as the Non-Controlling interest has increased on YoY basis.3
Reason for decrease in Return on Equity: Average net worth of the group has increased on YoY basis while the Profit after tax attributable to owners of the company has deceased on YoY basis.Total Income
The total income for the fiscal year ended 31 st March 2025 stood at 1,859.94 crore, an increase of 11 6.01 crore, or 6.65%,
from 1,743.93 crore for the fiscal year ended 31st March 2024. This increase is primarily due to increase in Sale of Services partly St
set off by decrease in Net gain on fair value changes from treasury investments of the group. Sale of service as a percentage of total Z
income was 77.71% for fiscal year ended 31st March 2025 as compared to 67.78% in fiscal year ended 31st March 2024.
Sale of Services
Sale of services for the fiscal year ended 31 st March 2025 stood at 1,445.31 crore, an increase of 263.25 crore or 22.27% from 1,1 82.06 crore for the fiscal year ended 31 st March 2024. The increase is largely attributed to the increase in management fees from MF Business and from NPS business.
Other Income
For the fiscal ended 31 st March 2025 other income was 8.85 crore, an increase of 1.88 crore, or 26.97%, from 6.97 crore for ^2
the fiscal year ended 31st March 2024. The principal reason behind this is increase in other non-operating income which includes 1^
interest on income tax refund etc.
Expenses
Fees and Commission Expenses: Fees and commission expenses increased by 0.77 crore, or 41 .62%, from 1 .85 crore in the fiscal year ended 31st March 2024 to 2.62 crore in the fiscal year ended 31st March 2025. This was primarily a result of increase in marketing fees paid to UTI International on account of marketing of domestic mutual fund schemes.
Finance Cost: Finance cost increased by 1 .44 crore or 12.78% from 1 1 .27 crore in the fiscal year ended 31st March 2024 to 1 2.71 crore in the fiscal year ended 31 st March 2025. This was mainly because of opening of new UFCs in the current financial year. Employee Benefit Expenses: Employee benefit expenses increased by 18.62 crore or 4.24% from 439.33 crore in the fiscal year ended 31st March 2024 to 457.95 crore in fiscal year ended 31st March 2025. This increase in employee expenses was primarily driven by substantial investments across all three lines of business of subsidiary companies, aimed at strengthening their workforce. Employee benefit expenses as a percentage of total income was 24.62% for the fiscal year ended 31 st March 2025 as compared to 25.19% for the fiscal year ended and 31st March 2024.
Depreciation and Amortisation Expenses: Depreciation and amortisation expenses increased by 3.28 crore or 7.76% from 42.26 crore in the fiscal year ended 31st March 2024 to 45.54 crore in the fiscal year ended 31st March 2025. This increase in the depreciation expenses is led by higher capitalisation in current financial year. Depreciation and amortisation expenses as a percentage of total income stood at 2.45% for the fiscal year ended 31st March 2025 compared to 2.42% for the fiscal year, ended 31st March 2024.
Other Expenses: Other expenses increased by 26.57 crore or 10.13% from 262.38 crore in the fiscal year ended 31st March 2024 to 288.95 crore in fiscal year ended 31st March 2025. This was mainly because of increase in membership fees and subscription charges, legal & professional fees and trail fees. Other expenses as a percentage of total income was 15.54% for the fiscal year ended 31st March 2025 compared to 15.05% for the fiscal year ended 31st March 2024.
Profit Before Tax: Profit before tax for the fiscal year ended 31st March 2025 was 1,052.1 7 crore, an increase of 65.33 crore, or 6.62%, from 986.84 crore for the fiscal year ended 31 st March 2024. This increase is primarily due to increase in sale of services. As a percentage of total income, profit before tax was 56.57% in the fiscal year ended 31st March 2025 and 56.59% in the fiscal year ended 31st March 2024.
Tax Expenses: In the fiscal year ended 31st March 2025, our tax expenses increased by 54.40 crore or 29.44% from 184.81 crore in the fiscal year ended 31st March 2024 to 239.21 crore in fiscal year ended 31st March 2025. The increase in the current tax was 52.94 crore or 34.21 % from 1 54.76 crore in the fiscal year ended 31 st March 2024 to 207.70 crore in fiscal year ended 31 st March 2025. This was mainly because of increase in the operating income. Deferred tax expenses increased by 1 .46 crore or 4.86% from deferred tax expenses of 30.05 crore in the fiscal year ended 31 st March 2024 to 31 .51 crore in fiscal year ended 31 st March 2025, deferred tax in created on the mainly on account of movement in fair value gains/losses on investment and on accounting as per Ind AS 116.
Profit After Tax (attributable to the owners of the Company): Profit after tax (attributable to the owners of the Company) for the fiscal year ended 31st March 2025 was 731.49 crore, a decrease of 34.19 crore, or 4.47%, from 765.68 crore for the fiscal year ended 31 st March 2024. This decrease was primarily due to increase in profit after tax of non-controlling interests in fiscal year ended 31 st March 2025 as compared to fiscal year ended 31 st March 2024. As a percentage of total income, profit after tax was 39.33% in the fiscal year ended 31st March 2025 and 43.91% in the fiscal year ended 31st March 2024.
Corporate Governance and Secretarial Practices
Your company has continued to adopt secretarial practices so as to align corporate governance with evolving regulatory framework. This commitment is reflected in several key efforts:
Compliance and Regulatory Adherence: We have ensured strict compliance with all applicable laws, regulations, and guidelines. Our Corporate Secretariat team has diligently monitored changes in regulatory requirements and promptly updated our practices to maintain full compliance.
Transparency and Accountability: Regular updates and comprehensive reports have been provided to stakeholders, reflecting our commitment to accountability and openness in all corporate actions.
Board Governance: Our secretarial practices have supported the effective functioning of the Board of Directors and its various committees. This includes the timely preparation and distribution of board materials, meticulous recording of minutes, and ensuring that board decisions are implemented efficiently.
Ethical Standards: We have reinforced adherence to a robust corporate governance policies and the promotion of ethical behavior across all levels of the organization.
Stakeholder Engagement: Our Corporate Secretariat team has played a pivotal role in facilitating effective communication and engagement with stakeholders viz. organizing annual general meetings, intimation through stock exchanges, responding to shareholder queries, and ensuring that stakeholder interests are considered in corporate decision-making.
Shareholder Queries and Complaints Mechanism
Our company is committed to maintaining open and effective communication with our shareholders. To ensure that their queries and complaints are addressed promptly and efficiently, we have established a robust mechanism:
Dedicated Communication Channels: Shareholders can reach out to us through multiple channels, including email, phone, through registrar and transfer agent i.e. KFintech. These channels are monitored regularly to ensure timely responses.
Tracking and Reporting: All queries and complaints are logged and tracked through our internal system. This allows us to monitor the status of each case and ensure that it is resolved satisfactorily. Regular reports are generated to review the types and frequency of queries and complaints, helping us identify areas for improvement.
Feedback: We encourage shareholders to provide feedback on their experience with our query and complaint handling process. This feedback is invaluable in helping us refine and enhance our mechanisms to better serve our shareholders.
Transparency and Accountability: We are committed to transparency in our dealings with shareholders. Regular updates on the status of their queries and complaints are provided, and we ensure that all responses are clear, accurate, and comprehensive. We continuously review and improve our shareholder query and query / complaint handling mechanism.
By implementing these measures, we aim to foster a positive relationship with our shareholders, ensuring their concerns are addressed promptly and effectively, and reinforcing our commitment to good corporate governance.
Our secretarial practices have been inculcated to the subsidiary companies also. The corporate governance policies were adopted by the subsidiary companies. All these activities have been done to the extent not conflicting their business and compliance model. Cautionary Statement
The statements in the Management Discussion and Analysis section that describe organisational objectives, projections, estimates and predictions may be considered forward-looking statements. All statements relating to expectations or projections about the future, including but not limited to those concerning the Companys strategy for growth, product development, market positioning, expenditures and financial results, are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations will prove to be accurate or will be realised. As a result, the actual results, performance or achievements may differ materially from those expressed or implied in such forward- looking statements. The Company assumes no obligation to publicly amend, modify or revise any forward-looking statements in light of subsequent developments, information or events.
To avoid duplication, certain information required to be disclosed in the Management Discussion and Analysis has been included in the Boards Report.
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+91 9892691696
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