The Quiet Revolution in India’s mutual fund landscape

Every month, millions of bank accounts send out small, automated payments. Nobody celebrates. Nobody posts about it. Nobody even notices. But ten years later, these unremarkable transactions have built something remarkable. This is the story of how India’s savers became investors, not through dramatic market calls or guru predictions, but through the simple act of showing up. Month after month. Year after year. Through crashes and euphoria alike. Three decades ago, when someone mentioned mutual funds, the typical response involved confusion with cooperatives or perhaps even chit funds. The few who understood were treated with suspicion. Why would you give your money to strangers to invest when your brother-in-law was an ‘agent’? Why pay fees when bank fixed deposits and PPF are always there? The answer, it turns out, wasn’t in the products themselves but in what they made possible: a process that worked even when you didn’t.

When Boring Became Beautiful

The transformation didn’t happen because mutual funds became exciting. It happened because they became boring in exactly the right way. The infrastructure arrived. UPI made payments effortless, e-mandates made SIPs automatic, and regulations made costs transparent. The rails removed friction, and friction was often the only thing standing between good intentions and actual wealth building.

But infrastructure alone doesn’t explain the shift. What changed was something more fundamental: Indians discovered that the market rewards process, not performance-chasing. The loud stuff—the themes that burn bright and fade, the tips that promise quick riches, the stocks that everyone is talking about—mostly make headlines, not wealth.

The March 2020 Test

Consider what happened during the initial Covid crash. In March 2020, when the world seemed to be coming to an end, two groups of investors emerged. The first group panicked, stopped their SIPs, moved money to fixed deposits, and waited for clarity. The second group, often with a dry-mouth nervousness that could have been mistaken for a Covid symptom, kept their SIPs running. Some even increased them, not because they were confident about the future, but because their plan instructed them to buy when things were cheap, and things were undeniably cheap. The SIP stoppage ratio (number of SIP discontinued/new SIPs registered) touched a high of 81% in May 2020 before dipping slowly over the next few months to 55% by December 2020 as markets stabilised.

The difference in outcomes over the next three years was staggering (see Lesson No. 1: Don’t Stop SIPs). Yet here’s the uncomfortable truth: the investors who did better weren’t smarter or braver. They were simply more committed to their process than to their feelings. This is the essence of what has changed in Indian investing. The question is no longer whether mutual funds work—the evidence is overwhelming that they do for patient investors. The question is whether investors can stay patient long enough for the process to work.

Bull Market Gurus Return

Every bull market produces the same phenomenon. Suddenly, everyone has discovered the secret to wealth creation. The random person who bought a few stocks last year is now dispensing investment wisdom. The neighbour who stumbled upon a multibagger is distributing daily gyan about market dynamics. Worst of all, people with barely two years of market experience are confidently educating others about long-term investing.

This isn’t new. Warren Buffett’s farm analogy, outlined in his 2013 shareholder letter, captures this perfectly. When he bought that Nebraska farm, he knew nothing about farming. But he understood something more important: what the asset would produce. He calculated expected returns based on corn and soybean production, taking into account improvements in productivity and prices over time. Whether the economy or stock market rose or fell in the following years was irrelevant to the investment’s success.

The parallel to mutual funds is exact. When you invest in a broadly diversified equity fund, you’re buying a claim on the productive capacity of Indian businesses. Whether the Sensex is at 70,000 or 90,000 next year matters far less than whether Indian companies continue to grow their earnings over the next decade. The evidence suggests they will, because the tailwinds remain intact: formalisation, rising incomes, improving infrastructure, and sensible regulation.

Scoreboard vs Playing Field

Yet investors obsess over the scoreboard instead of the playing field. They watch their mutual fund values daily, often hourly, creating exactly the kind of rapid feedback loop that leads to terrible decisions. Markets give you minute-to-minute valuations, but as Buffett noted about his farm, you never see a daily quote for productive assets. Imagine if farmers checked grain prices every hour and made planting decisions based on today’s volatility. Nothing would get planted.

The beauty of the mutual fund structure, when used correctly, is that it separates the decision to invest from the noise of daily pricing. You decide once—based on your goals, time horizon, and risk capacity. Then you execute through SIPs. The market’s daily drama becomes irrelevant because you’re not trying to outsmart it. You’re trying to harness it.

This distinction matters a lot. More Indian wealth is lost to impatience than to bear markets. The data is clear on this point, but the stories are even more compelling. Every market correction produces hundreds of tales of investors who sold at the bottom, swearing never to return to equities. Every bull market peak produces equally tragic stories of investors who piled in, convinced this time was different (see Reality Check: The Equity Rollercoaster)

Process Over Prediction

The uncomfortable truth is that successful long-term investing isn’t about making brilliant predictions. It’s about consistently making sensible decisions and avoiding major mistakes. This is why asset allocation—the boring choice of how much equity versus debt—explains more of your outcomes than which specific funds you select.

Think about what this means practically. Two investors start with the same amount. The first spends weeks researching the perfect fund, comparing five-year returns, reading analyst reports, and seeking the optimal choice. The second picks a simple, low-cost fund and focuses instead on getting the asset allocation right and automating the investment process. Ten years later, the second investor almost certainly does better, not because the fund performed better but because the focus was on process rather than prediction.

The shift from “which fund” to “which category for my goal” represents genuine progress in Indian investor behaviour. It means people are prioritising purpose over performance. It means they’re asking better questions.

But questions alone don’t build wealth. Action does, and the right action is often the least exciting one: automate your contributions, set calendar reminders for annual rebalancing, and then ignore the daily noise. No headlines. No drama. Just the quiet compounding that happens when you refuse to interrupt it unnecessarily.

The Real Achievement

The mutual fund industry has its problems. Products are oversold, costs are sometimes too high, and distribution practices need improvement. Yet for all its flaws, the industry has achieved something remarkable: it has made disciplined, diversified, professionally managed investing accessible to crores of Indians who would otherwise be navigating markets alone, probably poorly.

The question isn’t whether you should invest in mutual funds. For most people, the answer is obviously yes. The question is whether you can commit to the process long enough for it to work. Whether you can stay boring when everyone around you is getting excited. Whether you can keep investing when headlines scream danger, and pause your celebration when they scream euphoria.

The revolution in Indian investing isn’t about better products or smarter forecasts. It’s about ordinary people discovering that an ordinary process, followed long enough, produces extraordinary results. That’s the quiet revolution. And it’s still just beginning.

There will always be reasons to panic and reasons to gloat. Your plan must be indifferent to both. Pick the process once. Then let the process do its work. That’s not fashionable advice. It’s repeatable advice. And in investing, repetition compounds far better than fashion ever could.

One Last Word

You don’t need to predict the market to win. You need to refuse fashionable mistakes long enough for boring arithmetic to work in your favour. That arithmetic sits inside your SIP mandate, your rebalancing calendar, your cost discipline, and your refusal to abandon a sensible plan in an unsensible week. If we’ve done our job on this issue, you’ll walk away with a plan you can follow, not a tip you can forward.

Before SIPs, Before Apps, Before Everything

A personal account of when mutual fund investing in India was being invented

Dhirendra Kumar, Founder, Value Research

Thirty-two years ago, in the pages of this magazine, an article began with these words: "THE mutual fund mania is about to begin. With more than 89 schemes already operating in the country—and the first private sector mutual funds ready to be launched—just how do you decide which is the smartest fund to invest in?"

That was the beginning. The first Indian rating and review of mutual funds, in 1993, was done by Value Research in partnership with Business Today. Both organisations were relatively young at the time, as was India’s modern mutual fund industry, as well as the new, liberalised Indian economy.

In a few intense weeks, Business Today’s leadership and I invented a whole new way for Indian investors to evaluate mutual funds. We had no template to follow. We were making it up as we went along, driven by the simple conviction that Indian investors deserved a systematic way to understand what they were buying.

The rating system we created has stood the test of time. Decades later, with adjustments and refinements, it remains conceptually identical to Value Research’s current rating system. With thousands of funds today, it stands on the shoulders of what we built back then. The data constraints we faced at that time seem comical now. Even basic information like NAV was hard to obtain. They were calculated on a weekly or monthly basis. Fund houses would mail us physical reports. We’d manually enter numbers into spreadsheets. The idea of checking your portfolio on your phone was once the stuff of science fiction.

My young colleague Suman Horo did the core work of building a structured dataset using Excel. He is sadly no longer with us, but his contribution to Indian mutual fund investing lives on. Later, we discovered Excel macros, marking the beginning of our automation journey, a journey that ultimately led to the sophisticated systems that power our mutual fund analysis today.

What strikes me most is how much has changed and how much remains the same. The technology is unrecognisable. The scale is incomprehensible. Ranging from 89 schemes to thousands, from a handful of investors to crores. Yet the fundamental questions remain unchanged. How do you evaluate a fund? How do you know if it’s right for you?

The answers we developed in those early years, to focus on consistency, risk-adjusted returns, and the quality of the investment process, remain as relevant today as they were when we first typed them into our computers.

Three decades is a long time in any industry. But the real measure of success isn't in the numbers. We didn’t know we were helping to start that when we published those first ratings in 1993. Thirty-two years later, we're still trying to answer the same question: which funds are worth investing in? But now, at least, we know why it matters.