Direct plan adoption among retail investors climb to 26% in February : ICRA

The digitisation initiatives have resulted in a shifting trend towards ‘do it yourself’ (DIY) investments in direct mutual funds. The share of retail investors investing through direct schemes increased to 26% in February 2025 from 12% in March 2019, while the same increased to 28% from 21% for HNIs, according to a report by ICRA.

Driven by digitisation initiatives, the mutual fund industry’s penetration beyond the top 30 cities (B30) has significantly improved in recent years. The contribution of B30 cities to the overall AUM of the industry increased to approximately 18% in February 2025, up from around 15% in March 2019.

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Furthermore, investments from B30 cities have exhibited a strong preference for equity-oriented investments. As of February 2025, the share of equity assets in the overall AUM from industry’s penetration beyond the top 30 cities (B30) has significantly improved in recent years.

The contribution of B30 cities to the overall AUM of the industry increased to approximately 18% in February 2025, up from around 15% in March 2019. Furthermore, investments from B30 cities have exhibited a strong preference for equity-oriented investments. As of February 2025, the share of equity assets in the overall AUM from B30 cities stood at 86%, compared to 53% from the top 30 cities.

In the past few years, mutual funds have emerged as a popular investment channel for retail investors. This surge has been driven by enhanced access through digitisation initiatives, rising income levels, improved financial awareness, and a shift towards higher risk appetite investments.

During March 2020–December 2024, the unique investor base in MFs rose by 2.5 times to 5.3 crore; while the total number of accounts touched 23.45 crore in March 2025.

With remarkable net inflows of over Rs. 10 lakh crore and sizable mark-to-market gains, the equity AUM under MFs increased to Rs. 29 lakh crore in February 2025, up by 3 times from March 2020.

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The debt-oriented MF schemes, wherein a major share of investments is from institutional investors, also registered a healthy compound annual growth rate (CAGR) of about 19% during March 2020–February 2025. As of February 2025, 60% of MF AUM was held by individuals, while the remaining largely comprised debt-oriented investments held by institutional investors.

As of March 2024, the share of mutual funds in household financial assets increased to 11% from 7% in March 2020.

Over the past four years, new SIP registrations have surged to 6.8 crore in FY2025 from 2.7 crore in FY2022. The net increase in SIP accounts during this period stood at about 6.3 crore, representing 34% of outstanding accounts.

Over the past five years, SIP contributions have grown by 3 times to about Rs. 2.9 lakh crore in FY2025. A significant share of SIP contributions, over 80%, is directed towards equity-oriented schemes, which in FY2025 were estimated at 25-30% of the gross resource mobilisation by these schemes.

The share of equity AUM held for more than 24 months by retail investors increased to 61% in December 2025, up from 49% in December 2019. For high net worth individuals (HNIs), this share rose to 51% from 36%.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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