What AMFI did with Mutual Fund Sahi Hai is nothing short of extraordinary. I’d place it in the hall of fame alongside Thanda Matlab Coca Cola, Daag Acche Hain, and Pehle Istamal Karein Phir Vishwas Karein. This isn’t an advertising newsletter, but the campaign’s impact mimics how consumer brands build habits.
Here’s what these legendary taglines have in common: simplicity. None are complex because simplicity drives adoption at scale. This is beautifully visible in how India has embraced mutual funds.
Consider the transformation: In 2014, individual investors owned less than 3% of mutual funds in India’s equity markets. Today, that number stands at 9.2%. In rupee terms, household equity holdings through mutual funds have exploded from ₹2 lakh crore to nearly ₹41 lakh crore—an annualized growth rate of 29.4%, comprising one fifth of India’s GDP.
This week, I’m writing about my favorite asset class—and judging by the numbers, that of India’s too: Mutual Funds.
In this edition, we’ll cover:
- The quiet revolution in Indian household savings
- How India compares to global peers—and the runway ahead
- The SIP phenomenon and rise of direct plans
- The new challenge: Solving for ASAR
The Savings Shift That Changed Everything
For decades, the average Indian household had a simple relationship with money: earn it, park it in a fixed deposit or real estate, and forget about it.
Then something remarkable happened.
Between 2019 and 2024, the share of equity and investment funds in Indian household wealth jumped from 16% to 22%. In a country of 1.4 billion people, that’s a fundamental rewiring of how an entire generation thinks about money.
The fixed deposit is losing its iron grip. The ratio of bank deposits to mutual fund AUM has collapsed from 6.5x in 2012 to just 2.2x today.
Zoom out further, and the shift becomes even starker. Total household assets in India now stand at ₹1,300-1,400 lakh crore. In FY15, physical assets—primarily real estate—dominated at 66%. Investable assets were a mere 28%. By FY25, investable assets have climbed to approximately 35%, growing at 17% CAGR.
What’s driving this? Demonetization curbing cash-heavy real estate, millennials preferring renting over buying, and growing awareness that real estate returns of ~6% over 15 years pale against 10-12% equity returns.
The India Gap: Runway, Not Deficit
The global comparison is illuminating.
In the US, mutual funds alone account for 28-33% of household investable assets. Add direct equity (non-promoter holdings of 16-19%), and American households have nearly half their investable wealth in equity-linked instruments. Canada and the UK show similar patterns—40-45% in deposits, but substantial allocations to mutual funds (25-27% and 13-15% respectively).
India? We’re at 7-10% in direct equity and 30-35% in mutual funds. Our deposit addiction remains strong at 45-55% of investable assets.
But here’s what the developed market comparison misses: the pace of change. The US built its equity culture over decades, aided by 401(k) integration with mutual funds, attractive tax incentives, and widespread corporate equity plans like ESOPs and ESPPs.
India is compressing that journey. Our financial literacy is still catching up, our ESOP culture remains limited to startups and large firms, and yet we’re witnessing a financialization of savings that took the West generations to achieve.
Domestic Investors Come of Age
For years, India’s markets danced to a foreign tune. When FIIs bought, markets rose. When they sold, panic ensued. The ownership gap between foreign and domestic institutions was 19 percentage points in 2014.
Today? Under 6 percentage points.
Domestic mutual funds now hold nearly 11% of all listed equities, up from 3.4% a decade ago. In 18 consecutive quarters, DIIs have been net buyers. When global uncertainty triggers foreign outflows, Indian markets don’t collapse anymore. Domestic investors absorb the shock.
The SIP Revolution
In 2017, average monthly SIP inflows were ₹3,600 crore. By September 2025, that crossed ₹29,000 crore. Monthly.
Millions of Indians now set aside money every month with the discipline of paying a utility bill. Mutual fund folios have grown at 19% annually since 2020, crossing 25 crore accounts.
SIP isn’t a product anymore, it’s become a habit.
The Rise of Direct Plans
Perhaps no trend better captures India’s evolving investor sophistication than direct plans.
Direct plans have grown because investors are increasingly cost-sensitive and can clearly see the long-term impact of higher expense ratios on returns.
At the same time, trust has shifted away from commission-led distribution due to perceived conflicts of interest.
As investing has become more execution-first and data-driven, many investors prefer a self-serve, transparent route—driving the rise of fintech platforms and direct channels in the AUM mix.
Below is a line-level rewrite of your closing section — from “The New Problem: From Stock Picking to Fund Picking” through the end. I’ve kept your voice and structure, but tightened the prose, made ASAR more “operator-mode,” and added one or two truth-serum lines so it feels more credible to a time-poor Indian wealth creator.
The New Problem: From Stock Picking to Fund Picking
Here’s where I want to pause.
Everything we’ve discussed is genuinely exciting. But for wealth creators like you, a new problem has quietly emerged.
Mutual funds were invented to solve a simple pain: stock picking is hard. So we outsourced it to professional fund managers. Problem solved.
Except now we’ve created the next layer of complexity.
India has 1,800+ mutual fund schemes, 40+ AMCs, and a growing set of categories and sub-categories. We solved stock picking by creating a fund-picking problem.
For India’s ambitious wealth creators—money-rich but time-poor—this creates real friction. The question is no longer “Should I invest in mutual funds?” It’s:
“How do I navigate the mutual fund universe intelligently—without turning investing into a second job?”
The ASAR Framework
Successful mutual fund investing comes down to four pillars:
Access. Selection. Allocation. Review.
A — Access
The first hurdle is cost.
Regular plans come with embedded commissions that quietly compound against you. Even a ~1% annual difference in costs can meaningfully dent your long-term corpus over a 15–20 year horizon.
Direct plans solve the cost problem—but they often push you into DIY territory. And without a process (or the right guidance), you’re back to square one.
A simple way to think about it:
- Pay for advice, not distribution.
- Minimize product cost (expense ratio) and maximize decision quality (process).
S — Selection
With 1,800+ schemes, “choosing funds” can become its own form of overthinking.
Past performance is noisy. Star ratings change. Fund managers change. Styles drift.
Most wealth creators end up in one of two traps:
- Too few funds → concentration risk, style risk
- Too many funds → overlap, clutter, and no real accountability
(Yes, the “128-fund portfolio” is real—and it’s more common than you’d think.)
Selection needs a rulebook, not vibes. At a minimum, your selection process should answer:
- What role does this fund play in my portfolio? (core / satellite / debt / goal-linked)
- Is the strategy consistent and repeatable?
- Do I already own something that behaves the same way?
A — Allocation
This is where wealth is actually built (or quietly leaked).
Your allocation decides:
- how much volatility you’ll tolerate,
- how tax-efficient your portfolio becomes,
- and whether you’re set up for staying invested when markets get ugly.
Allocation isn’t a one-time decision. Markets change. Goals evolve. Life happens. Your portfolio has to keep up—without becoming messy.
A good allocation is simple enough to maintain, and robust enough to survive cycles.
R — Review
This is where most investors fail: they invest and forget.
Review doesn’t mean daily checking. It means systematic evaluation, with clear triggers:
- Are funds performing against benchmarks and category peers over a meaningful period?
- Has the fund’s role in the portfolio changed due to market moves?
- Has my allocation drifted enough to require rebalancing?
- Have my goals, cash flows, or timelines changed?
The wealth creators who build lasting portfolios aren’t the ones who “picked the best fund.”
They’re the ones who built a review mechanism that course-corrects before small mistakes become expensive ones.
In Summary
India’s mutual fund industry has moved from niche to mainstream.
Individual participation has surged. Domestic investors now meaningfully counter-balance foreign flows. SIPs have scaled into a national habit. Investable assets are rising as household behavior rewires.
“Mutual Fund Sahi Hai” wasn’t just a tagline. It was a promise—and the numbers suggest that promise is being kept.
But for wealth creators, the next chapter isn’t just about participating.
It’s about navigating intelligently.
Access. Selection. Allocation. Review.
Get these four pillars right, and mutual funds stop feeling overwhelming—and start feeling empowering.
The revolution has already happened.
The question is: do you have a system to benefit from it?
Disclaimer – Mutual Fund investments are subject to market risks, read all scheme-related documents carefully. The information provided herein is intended solely for educational purposes and should not be construed as solicitation, advertising, or providing any financial or investment advice. Readers are advised to consult with their financial advisor before making investment decisions based on the information provided herein.
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Sources – Bain and Co. How India Invests 2025 Report, National Stock Exchange Pulse November 2025