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Unique MF investor count up 20% YoY at 54 mn in 2025; target mid, smallcaps
The mutual fund industry has seen a rise in number of investors in the last few years with the count of new / unique investors hitting the 54 million mark in 2025, up a healthy 20 per cent (45 million) compared to 2024, and a staggering 42 per cent (38 million) rise when compared to 2023, suggests a recent note by Kotak Institutional Equities (KIE).
A bulk of their flows, the KIE note said, is concentrated around midcap, small-cap and thematic funds.
While flow to the midcap, smallcap and thematic funds totaled ₹153 billion, ₹175 billion and ₹169 billion respectively in 2025, the large-cap and large & midcap funds garnered Rs 111 billion and ₹120 billion respectively during this period, the Kotak report suggests.
Only the flexicap category with flows totaling ₹220 billion has garnered more attention in 2025, the KIE note suggests.
That said, the average retail investor who was rewarded handsomely given the surge in the markets in the last few years, KIE believes, have turned more cautious now.
Any downturn in general investment sentiment, wrote Sanjeev Prasad, managing director and co-head of Kotak Institutional Equities in a coauthored note with Anindya Bhowmik and Sunita Baldawa, can test the holding power of the average retail investor.
"An improved domestic macroeconomic outlook, dubious positive narratives about India and certain sectors may have supported the positive sentiment, even as business conditions and earnings outlook have seen some deterioration. The strong upturn in net FII flows, likely supported by the above-mentioned positives, has been able to paper over the weakness in DII flows," Prasad added.
Assets under management
As of March 2025, the mutual fund industry's assets under management (AUM), according to the AMFI Annual Report for fiscal 2025, hit an all-time high of ₹65.74 trillion. This milestone was largely driven by record net inflows of ₹8.15 lakh crore during the fiscal year—reflecting strong investor confidence and robust market participation.
"Systematic Investment Plans (SIPs) have continued to gain popularity, with a notable year-on-year increase in SIP contributions. The consistent rise in SIP accounts and a detailed analysis of investment trends indicate a growing preference among investors for disciplined, long-term investing over short-term speculation. This shift underscores a more mature and patient investor mindset," said Venkat N Chalasani, chief executive officer at AMFI.
Within the MF space, equity-oriented schemes dominated net inflow, at ₹4.17 trillion, with income / debt-oriented, hybrid and passive schemes (included in others) recording net flows as well, indicating a diversification strategy employed by investors, AMFI said in its annual report.
Inflows into debt funds (₹1.38 trillion), AMFI said, rebounded after three years of successive outflows, as investors sought relatively stable returns and lower risk offered by the category.
Lowering of the repo rate to 6.25 per cent in February 2025 from 6.50 per cent by the Reserve Bank of India, with expectations of further rate cuts, and decline in yields also attracted investors to the category.
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