‘MF industry to have 10 crore investors in 5-10 years’

At the Cafemutual Ideas Fest 2025 (CIF25), Saugata Chatterjee, CBO - Sales & Distribution,  Nippon India Mutual Fund has highlighted  some changing trends and talked  about long-term sustainability of distributors.

Chatterjee said "If SIP is long term, are we thinking long term from our business point of view?" The CBO said that business growth would come from increasing the number of investors over time.

Here are the key points he made:

Changing asset mix in the MF industry

The mutual fund industry has become increasingly focused on equity. As of January 2025, equity accounts for 61% of the overall asset mix, followed by debt at 19%, hybrid at 10% and liquid funds at 10%. This represents a major shift from March 2021, when equity stood at 43%, debt at 34%, liquid funds at 14%, and hybrid at 9%.

MFDs also reflect this trend, with 73% of their assets in equity, 16% in hybrid funds, 9% in debt, and 2% in liquid funds. This is a stark contrast from March 2021, when MFDs had a more balanced portfolio, with equity at 56%, debt at 24%, hybrid at 16%, and liquid funds at 4%.

Let’s look at the numbers here:

Chatterjee warned against ignoring asset classes that have shrunk in share over time. "You are increasing the risk profile of your clients by focusing too much on one asset class," he said.

He urged MFDs to practice asset allocation to build a sustainable business.

The MF industry to add another 5 crore investors in 5-10

Chatterjee predicted that mutual fund investor count would grow from 5 crore to 10 crore in the next 5-10 years. Additionally, he focused on the emergence of a new segment of 25 crore earners aged 25 to 40 in the coming decade. He advised MFDs to build the necessary infrastructure to cater to this expanding investor base.

Chatterjee also said a lot of money has moved into the banking system in the last 18 months, "Rs.13 lakh crore have come into the banking system in the last 18 months.”

He urged MFDs to use this opportunity by offering investment options beyond traditional equity funds.

Ticket sizes

Chatterjee emphasized the need for a balanced asset mix, showing that debt schemes provide nine times the average ticket size of equity schemes, while hybrid schemes offer four times as much. He stated, "If you want to grow AUM, you must look beyond just equity."

Let’s look at the numbers for the average ticket sizes here:

How can MFDs expand business?

Chatterjee said that the MFDs have grown by 25% in the past one year and currently manages assets of Rs. 16.4 lakh crore. What is more, they contribute Rs. 8,276 crore to the overall SIP book as of January 2025, making up 34.87% of the mutual fund industry’s total SIP book. But considering the amount of new investors that will be coming in, Chatterjee encouraged MFDs to expand business and explained the different business structures.

In the Business to Consumer model (B2C), MFDs directly serve retail investors. Some work from small offices or even from home, mainly focusing on equity and SIP investments. Others operate mid-sized offices with small teams that offer hybrid funds and diversified asset allocation. Larger offices cater to high-net-worth individuals (HNIs) and ultra-HNIs, providing advanced services like portfolio management and international investments. Chatterjee advised MFDs to think beyond small setups and scale up, saying, "You can’t remain in one category and think big. You have to start investing in your businesses to make them large."

The B2B model, on the other hand, involves working with businesses such as banks, corporate firms and fintech platforms. Some MFDs have built corporate entities with large teams, offering financial solutions like employee benefit plans and treasury management.

You can watch the full session here.