Mutual funds and equities fastest-growing asset classes, says report

Yet India's household allocation remains far below US, UK, Canada

Mutual funds (MFs) and direct equities have emerged as the fastest-growing asset classes, outpacing deposits. However, India still lags far behind developed economies in household allocation to these instruments — compared to countries such as the US, the UK, Canada, China, and Brazil — according to the How India Invests 2025 report conducted by Bain & Company in association with Groww, released on Monday.

 

By the end of 2025, Indian household wealth is projected to reach ₹1,300-1,400 trillion, with investible assets accounting for 35 per cent of total household assets, up from 28 per cent a decade ago.

 

Listed MFs have gained traction over the past decade. Their share of assets under management (AUM) in investible assets has risen from 4 per cent in 2015 to 9 per cent in 2025, growing at a compound annual growth rate (CAGR) of 22 per cent. The share of listed equities has increased from 29 per cent to 37 per cent over the same period, growing at 16 per cent CAGR. In contrast, the share of deposits in investible assets has fallen from 63 per cent to 49 per cent, growing at only 11 per cent CAGR. 

Yet, despite this shift in investment behaviour, India’s allocation to MFs and listed equities as a share of total investible assets (2024 estimates) remains 15-20 per cent — far lower than 52-59 per cent in Canada, 50-60 per cent in the US, 40-45 per cent in Brazil, 38-42 per cent in the UK, and 22-28 per cent in Mexico. The gap offers substantial headroom for future growth. 

In MFs alone, India has wide scope for expansion. Their share of investible assets stands at just 7-10 per cent, compared to 40-45 per cent in Canada, 30-35 per cent in Brazil, 28-33 per cent in the US, 25-27 per cent in the UK, and 8-12 per cent in China. 

Despite the challenges, the report highlights several interesting trends. The contribution of MF AUM from cities beyond the top 110 has risen to 19 per cent, from 10 per cent in 2018-19 (FY19), reflecting deeper market penetration. 

 

Women are also entering the investment landscape in greater numbers — their average MF portfolio size has risen 23 per cent since FY19, compared to just 5 per cent for men over the same period. Younger investors are driving the equity market as well: 40 per cent of National Stock Exchange-registered investors are under 30, up from

23 per cent in FY19. 

Systematic investment plans are becoming the preferred route to invest — their share of total individual MF AUM has climbed to 40 per cent, from just 19 per cent in FY19.