Retail & HNIs drive MF boom: 61% AUM share, 8x growth in 10 years, report finds

Individual investors now account for over 61% of India's total mutual fund assets under management (AUM), according to the latest data from Franklin Templeton India Mutual Fund. This significant milestone comprises 27.01% from retail investors and 33.67% from high-net-worth individuals (HNIs), marking a notable contrast with institutional investor contributions. The development highlights the increasing engagement of individual investors in India's capital markets.

The report underscores a nearly eight-fold increase in individual investor AUM over the past decade, outpacing the overall industry growth of six-fold during the same period. While the mutual fund industry recorded a compound annual growth rate (CAGR) of 24% over the last five years, individual investor AUM maintained a steady 23% CAGR, reflecting consistent retail interest. This trend indicates a robust and sustained commitment from individual investors, contributing significantly to the overall market dynamics.

A key point noted in the report is the shift in investor behaviour signalled by the rise in retail and HNI contributions. "The rise in retail and HNI contributions marks a clear structural shift in investor behaviour. Mutual funds are no longer niche—they’re mainstream," remarked the fund house, indicating an evolution in the investment landscape. This shift has been driven by increased financial literacy and accessibility to investment platforms.

Interestingly, 87% of individual investor assets are now allocated to equity-oriented schemes. This contrasts with the more conservative approach of institutional investors, who allocate only 19% of their AUM to equities, preferring more stable investments in debt and liquid instruments. The preference for equities among individual investors underscores their growing risk appetite and optimism about long-term growth.

The growing confidence among investors is also evident in the increase in systematic investment plan (SIP) sizes. The average SIP ticket size rose to ₹2,966 in June 2025, nearing the ₹3,000 mark, which is higher than the pre-COVID average of ₹2,861 in December 2019. This trend suggests an increased willingness among investors to commit larger amounts regularly, reflecting their trust in the market's potential.

Passive investing is gaining traction as well, with passive fund AUM reaching ₹12.33 lakh crore in June 2025, a 21% increase from the previous year. Over five years, passive fund folios have grown 17 times, now representing 17% of the total AUM, up from 10% in 2021. This growth highlights the appeal of low-cost, diversified investment options that passive funds offer.

The report also emphasised the dominance of mutual funds over foreign portfolio investors (FPIs) in the past year. Domestic institutional investors (DIIs) recorded net inflows of ₹6.5 lakh crore, while FPIs saw net outflows of ₹3 lakh crore, reinforcing domestic capital's growing influence in the market. This shift underscores the strategic importance of domestic investors in stabilizing and driving the market forward.

Franklin Templeton highlighted mutual funds as the preferred route for wealth creation due to their transparency, diversification, and professional management. As awareness and digital access increase, along with steady SIP flows, the mutual fund industry is poised for further growth. The industry's resilience and adaptability continue to attract a diverse range of investors, ensuring its pivotal role in wealth management.