#MutualFunds #ICRAAnalytics #RetailInvestors #DirectPlans #B30Growth #FinancialInclusion #EquityInvesting #MutualFundTrends #IndianEconomy #InvestorAwareness #WealthCreation #DigitalInvestment #SIPRevolution
Mumbai: India’s mutual fund industry is witnessing a structural shift in investor behavior, with increasing participation from smaller towns and a rising preference for direct investment plans. According to the latest data from ICRA Analytics, sourced from AMFI, 27.4% of retail investors chose direct mutual fund plans in September 2025, signaling rising financial awareness and confidence in self-managed investments.
This trend is especially significant considering the strong contribution coming from B30 (Beyond Top 30) locations, which include India’s emerging cities and smaller towns. Mutual fund assets from these regions grew 2.6% month-on-month, reaching ₹14.50 lakh crore in September 2025 compared to ₹14.14 lakh crore in August. On an annual basis, assets from B30 regions surged by 15%, outpacing several key financial markets.
Growing Financial Inclusion in Tier-II and Tier-III Cities
The growth in B30 assets demonstrates a deepening financial inclusion story. Investors from smaller cities are increasingly turning to mutual funds, especially equity-oriented schemes, as a tool for long-term wealth creation.
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76.6% of B30 assets are parked in equity schemes
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9.1% in hybrid/balanced funds
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11.7% in debt-oriented schemes
This clear preference for equities highlights the growing risk appetite among retail investors outside major metro cities, driven by strong market performance, digital onboarding platforms, and improved financial literacy.
Direct Plans Gain Popularity
Direct mutual fund plans—where investors invest without paying distributor commissions—are becoming a preferred choice among retail investors:
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27.4% of retail investors opted for direct plans
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65.3% invested via Non-Associate Distributors
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Among HNIs, 28.9% of mutual fund assets were invested directly
Overall, direct investments account for 47.7% of the total mutual fund industry’s assets, reflecting a major transformation in investor mindset.
This shift indicates greater investor confidence in research tools, digital advisory platforms, and cost-efficiency awareness. Retail investors are increasingly leaning toward direct plans to maximize returns by eliminating distribution charges.
Institutional vs Retail Investment Trends
While B30 regions contribute 27.5% of individual mutual fund assets, institutional participation from these areas remains low at 4.9%, as most institutional investments are still concentrated in the top 30 cities.
The T30 (Top 30) cities also reported strong annual growth of 14%, maintaining their dominant share of institutional investments.
Why Smaller Town Investors Prefer Mutual Funds
Several factors are contributing to this investment boom from smaller towns:
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Increased financial awareness campaigns by AMFI and fund houses
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Simplified digital KYC and mobile investment apps
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Growing equity market performance encouraging long-term wealth creation
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Rising disposable incomes and aspirations for financial independence
Industry Outlook: Will the Trend Sustain?
Industry experts believe the participation of first-time investors from semi-urban and rural areas will continue to increase. With strong interest in equity schemes and growing adoption of systematic investment plans (SIPs), India’s mutual fund penetration is expected to expand further in FY26.
The growing popularity of direct plans also indicates more informed decision-making by investors who seek to optimize returns in the long term. This democratization of investments is a positive sign for the overall maturity of the Indian financial ecosystem.
Conclusion
The rise of direct investments and increasing mutual fund penetration in smaller cities reflect a new era in India’s financial growth story. With nearly 27% of retail investors now opting for direct plans, the trend reveals a growing investor class that is digitally empowered, cost-conscious, and ready to take control of their financial future.
This marks a turning point for the Indian mutual fund industry, where the next wave of growth is being driven not just by metros, but by aspirational investors from Tier-II, Tier-III, and emerging regions of India.
📌 Hashtags
#MutualFunds #ICRAAnalytics #RetailInvestors #DirectPlans #B30Growth #FinancialInclusion #EquityInvesting #MutualFundTrends #IndianEconomy #InvestorAwareness #WealthCreation #DigitalInvestment #SIPRevolution
