Mutual Fund Investment Trends in India: What to Expect Next

Riya is a 28-year-old marketing executive living in Indore. Like many young professionals, she’s financially independent and conscious about saving for the future. But until recently, investing wasn’t on her thought process.

In early 2025, after receiving her annual bonus, she found herself in difficulty, deciding whether to upgrade her phone, go on a vacation, or do something different. She had heard her colleagues talk about mutual funds, seen SIP reels on Instagram, and even stumbled upon YouTube videos titled “Best Mutual Funds to Invest in 2025.”

Curious, she opened her finance app, typed in “mutual funds,” and began her journey into the world of investing, unknowingly becoming part of a much larger trend reshaping India’s financial landscape.

What followed was a journey that reflects exactly where the mutual fund industry trends in India are heading.

1. Thematic Funds Gaining Momentum
As she scrolled, Riya discovered mutual funds built around specific sectors like Green Energy, EVs, Pharma, and Digital India. They weren’t just about returns; they were aligned with India’s future. She chose a tech-focused thematic fund, driven by her belief in India's digital growth. She explored a Digital India Thematic Fund, excited by India’s push toward a tech-powered economy. The idea of investing in a future she believed in made her decision easier.

From this, we can understand that we should expect more specialised funds linked to long-term government priorities like AI, defence, sustainability, and electric mobility. In the coming years, AMCs (Asset Management Companies) will continue launching thematic funds based on evolving global and national priorities, from climate change to artificial intelligence.

2. SIPs Spreading to Smaller Cities
During a call with her cousin in Raipur, Riya was surprised to hear:

“Even my mom started a ₹1,000 SIP in a mutual fund last month.”

This surprised her. Her aunt had never touched mutual funds before.

Thanks to digital platforms and simplified onboarding, SIPs (Systematic Investment Plans) are now accessible beyond metros. Riya realised that mutual fund investing is no longer just for individuals living in big cities, but it's for everyone. Thanks to mobile apps and investor education, mutual fund investments are now rapidly picking up pace in Tier-II and Tier-III cities.

This trend suggests an anticipated increase in SIP contributions from smaller cities to metropolitan areas, indicating growing participation of retail investors in the market.

3. Passive Investing on the Rise
Riya didn’t feel confident selecting the “best” fund. At that time she came across index funds which are low-cost, passive mutual funds that simply track the performance of a market indices. No fund manager making calls. No risk of underperformance. Just steady, long-term growth. She started a second SIP in a passive Nifty Index Fund, calling it her “peace-of-mind” portfolio.

It can be expected that more passive mutual funds, including sector-specific index funds and global Exchange Traded Funds, will appeal to first-time investors in times to come.

4. Transparent and Investor-Friendly Regulations
While comparing funds, Riya noticed detailed disclosures like expense ratios, fund manager history, portfolio breakdown, and past performance charts. Everything was clear, organised, and easy to understand.

She didn’t know it then, but this was the result of SEBI’s regulatory push to increase transparency, reduce hidden charges, and ensure standardisation across the mutual fund industry. Due to this, the result included more trust, less confusion, and higher confidence among retail investors.

What we can expect in the future is further reforms to ensure standard disclosures, ethical fund management, and simpler fund categorisation, which will make mutual funds more trustworthy than ever.

5. Evolving Role of Financial Products Distributors
As Riya explored further, she noticed how distributors were shifting from just selling products to offering personalised financial guidance. Instead of pushing schemes, they were helping investors understand their goals, risks, and suitable fund options.

This marks a growing trend in the mutual fund industry, where advisors and distributors are becoming more tech-savvy, investor-centric, and education-driven. Moving forward, their role will be less transactional and more focused on building long-term trust and transparency in the investment process.

Riya, while not a financial expert, embodies a new generation of financially savvy Indians. This generation is proactive in pursuing their financial aspirations and keen to understand where their money is invested. Her journey highlights emerging mutual fund trends, including increased personalisation, digital inclusivity, thematic investing, youth-driven growth, and a greater emphasis on transparency.

Riya's experience offers valuable insights into current mutual fund trends in India. Staying informed about these evolving market dynamics is crucial.

“Mutual Fund investments are subject to market risk. Read all scheme-related documents carefully.”