Executive summary

India’s household wealth has seen a structural transformation over the last few years, with a shift from traditional savings to capital market-linked investments. Mutual funds and direct equities have emerged as the fastest-growing asset classes, outpacing deposits, with growth driven by increasing financial literacy, robust market performance, strong regulatory support, and a proliferation of digital-first investing platforms.

However, India still trails developed economies in allocation of assets to capital markets. Mutual fund and equity allocations constitute just 15%–20% of household investable assets. In countries like the US and Canada, this allocation is closer to 50%–60%. Therefore, significant opportunity exists for growth in the Indian market.

Over the next decade, mutual fund assets under management (AUM) in India are projected to exceed INR 300 lakh crore because of existing investors’ sustained activity, along with a continued increase in household penetration, especially in B30 cities. This growth can be attributed to an expansion of digitally enabled mutual fund distributors, registered investment advisers, and regulatory support for accessibility and awareness. Meanwhile, direct equity holdings are expected to approach INR 250 lakh crore, with the key enabler being a shift from short-term speculative investing to long-term wealth creation.

At the center of this transformation lies a digitally native, demographically diverse investor base. Over the past five years, digital platforms have emerged as the key channel of investing, accounting for the activity of ~80% of direct equity investors and ~35% of mutual fund investors. Analysis of investor cohorts on digital platforms reveals that there has been a consistent shift from speculative trading in direct equities to long-term mutual fund investing through systematic investment plans (SIPs). The salaried segment shows the highest allocation to mutual funds, especially via SIPs, indicating a preference for professionally managed portfolios and long-term goals. Business owners skew more toward direct equities with higher trading velocity. With mutual funds, SIPs are the dominant mode of investing, and lump-sum investments are gaining market share as investors mature and gain confidence.

Investment behavior is also becoming more sophisticated, with a noticeable movement toward higher-risk funds like mid-cap, thematic, and small-cap funds, especially among the younger customer segments. The steady rise in average SIP ticket size reflects growing investor confidence. Sensitivity to market movement is also segment specific, with Gen Z investors tending to be more reactive to market movements, while salaried Gen X investors exhibit more steady behavior.

These evolving behaviors point to a maturing investor base that is more diverse and more oriented toward long-term goals. Such behaviors also offer clear implications for industry participants, highlighting the need for segment-specific products, behavioral nudges, and investor education to sustain engagement and deepen wallet share.

Retail investing also plays a critical role in India’s broader economic development, enabling a virtuous cycle across four key areas: capital formation, financial inclusion, capital market resilience, and employment generation. Rising household flows into mutual funds and direct equities are fueling greater access to capital, especially for small and medium enterprises.

Investment access has widened, with growing participation from women, young investors, and investors outside the top cities. Broader access has unlocked job creation across the distribution value chain, with more than 7 lakh jobs expected to be created over the next decade in areas such as mutual fund distribution and wealth relationship management, not to mention the indirect job creation via business expansion supported by capital access. Rising domestic participation has also strengthened India’s capital market resilience, with retail investors and mutual funds acting as stabilizing forces during episodes of global volatility.

Retail investment capital will play a foundational role in India’s efforts to grow its economy to the $30 trillion mark by 2047, which is key to the Viksit Bharat mission. This activity could cause per capita GDP growth as high as six times the current GDP and help secure the financial future of millions of households across India.

About Groww

Groww was born with a mission to make building wealth simple, transparent, and delightful. Founded by Lalit Keshre, Harsh Jain, Ishan Bansal, and Neeraj Singh in 2016, Groww has empowered millions of Indians over the years to take control of their wealth by breaking down all barriers, whether they are psychological, educational, or technical. With its intuitive and user-friendly experience, educational initiatives, and wide range of financial products, Groww is truly built for a growwing India.