Retail share in MF pie shrinks for second year; HNIs ramp up bets

HNIs gain massive share in passive AUM in 5 years

Retail investors’ share in mutual fund (MF) assets under management (AUM) has fallen for a second straight year, even as gross systematic investment plan (SIP) inflows continued to inch up, as weaker equity markets eroded the value of their holdings. At the same time, the share of high networth individuals (HNIs) has risen, but moderately.

 

Retail investors accounted for 59.5 per cent of MF assets in March 2026, down from 62.2 per cent in March 2024, according to data released by the Association of Mutual Funds in India (Amfi). Their share had risen steadily for several years before the decline.

 

This coincided with weaker equity-market performance, which likely weighed more heavily on retail investors given their higher exposure to stocks.

 

Heightened volatility and the market correction after September 2024 led to mark-to-market losses, dampening investor interest.

 

The Nifty 50 fell over 5 per cent in the two-year period through March 2024, while the Nifty Smallcap 250 was broadly flat and the Nifty Midcap 150 gained 6 per cent. Small and midcap stocks have since staged a sharp recovery this year.

 

Smallcap stocks, however, remained volatile between September 2024 and March 2026. The Nifty Smallcap 250 delivered a return of less than 1 per cent in the two years through March 2026. 

 

“The decline in retail’s share of MF AUM does not necessarily indicate lower retail participation. A large part of it reflects market movements, as corrections in mid and smallcap stocks impacted retail-heavy portfolios more than institutional allocations,” said Aakanksha Shukla, AVP, Wealth Management at Master Capital Services.

 

HNIs, meanwhile, have continued to increase their share of MF assets, although the pace of gains has moderated. According to Amfi data, their share rose from 30.4 per cent in March 2022 to 32.3 per cent in March 2024, before edging up to 32.7 per cent in March 2026.

 

The industry classifies an investment account as an HNI folio if it receives ₹2 lakh or more in a single transaction.

 

“Even a relatively small increase in the number of HNI investors leads to substantial inflows because HNI tickets are considerably larger than retail transactions. Rising wealth, greater MF awareness and increasing acceptance of market-linked products among affluent investors would have supported this trend,” said Aditya Agarwal, co-founder of Wealthy.in, a wealth management platform.

 

The HNI shift is far more pronounced in passive funds. Their share of passive-fund AUM almost trebled to 19.9 per cent in March 2026 from 6.6 per cent five years earlier.

 

Corporations remained the dominant investor group but their share fell to 69.6 per cent from 78.4 per cent over the same period. Retail investors’ share also declined, to 9.1 per cent from 13.4 per cent.

 

The changing mix suggests passive investing is gradually drawing a larger pool of affluent individual investors, even as institutional investors continue to dominate the segment.

 

Experts attribute the sharp rise in HNI participation to greater familiarity with index funds and exchange-traded funds (ETFs), as well as increased exposure to gold and silver MF schemes. Wealthy investors have also increasingly turned to passive strategies for largecap investments.

 

That shift has occurred despite distributors and even registered investment advisers (RIAs) not actively recommending passive funds.

 

“The most important reason that most RIAs do not like to recommend index funds is that it is difficult for the typical RIA to justify an RIA fee of 1 per cent per annum when the investment product’s fee is only 0.2 per cent per annum. The second most important reason is that the investment in index funds do not need to be reviewed each year and that reduces the probability of the client renewing the engagement with the RIA,” said Avinash Luthria, RIA at Fiduciaries.in.

 

Gold and silver investments may have provided another boost to HNI participation in passive products. Holdings through gold and silver ETFs and funds of funds are also likely to have contributed to the increase in their share.

 

AUM of gold and silver ETFs stood at ₹2.5 trillion in March 2026, up 17-fold from March 2021.