Mutual fund distribution industry could grow 30% if penetration doubles: Experts

(Representative image)

• India's mutual fund distributor revenue: Rs 30,000-35,000 crore
• Industry could grow 30 percent annually with deeper penetration
• Human advisors remain vital despite fintech and direct plans

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India’s mutual fund distribution ecosystem already commands a revenue pool of roughly Rs 30,000 to 35,000 crore, with the potential to grow significantly faster if industry penetration deepens, industry executives said at the Moneycontrol FIDEX 2026 panel discussion on Day 2.

Underscoring the scale of opportunity even as fintech platforms and direct plans reshape the landscape, Deepak Jain, President and Head – Sales at Edelweiss Mutual Fund, said the current economics of the business reflect both the size and growth trajectory of the industry.

According to Jain, India’s mutual fund industry that currently manages assets of around Rs 80 lakh crore, has Rs 48 to 50 lakh crore being commanded by equity and hybrid funds. Nearly 70 percent of these assets are in regular plans, where distributors earn commissions.

“If you multiply that by roughly 0.7 to 0.8 percent average distributor revenue, the total revenue pool for mutual fund distributors works out to about Rs 30,000 to 35,000 crore,” Jain said, adding that the pool has grown at roughly 15 percent annually since the introduction of direct plans in 2012.

More importantly, he argued that the industry’s growth potential remains far from exhausted. Globally, mutual fund assets typically account for 40 to 50 percent of GDP, while in India the ratio stands at only 16 to 17 percent.

“If that number were to double and you combine India’s 10 percent nominal GDP growth with market growth, the industry could grow at nearly 30 percent annually,” Jain said.

The structural growth opportunity is also tied to broader economic trends.

Gaurav Goyal, Head of Sales at Canara Robeco Mutual Fund, said India’s long-term economic expansion will naturally drive greater participation in financial markets.

With India aspiring to become a $30 trillion economy, rising incomes and expanding household wealth are expected to increase the share of savings allocated to financial assets.

“Per capita income could grow eight to ten times over the coming decades. As disposable income rises, the surplus available for savings and investments will increase significantly,” Goyal said.

Despite the rapid growth in the past decade, penetration remains relatively low. India currently has fewer than six crore mutual fund investors, leaving a large untapped base of potential participants across the country.

While technology platforms and direct investing options have altered distribution dynamics, panelists argued that the role of human advisors remains critical, particularly during volatile market phases.

Goyal pointed to the growing number of systematic investment plans (SIPs) but noted that many investors fail to stay invested through the full cycle, often discontinuing contributions prematurely.

“Advisors play the role of guiding investors through volatility. When markets fall, they help investors stay committed to their long-term goals and continue accumulating units rather than exiting,” he said.

Industry leaders also acknowledged structural challenges facing distributors, including commission compression, rising competition from fintech platforms, and the shift toward direct plans.

Kaustubh Majumdar of Unien Financial said many distributors still operate as individual practices rather than scalable businesses, which limits long-term growth.

To build sustainable advisory businesses, distributors must move beyond product sales and focus on deeper client relationships and structured planning, he said.

“The client stays not because of a 25 to 50 basis point difference in fees but because they feel understood,” Majumdar said, highlighting the importance of documenting client goals, family situations and long-term financial plans.

Technology, meanwhile, is expected to reshape — but not replace — the advisory role.

Anil Rego, Founder and CEO of Right Horizons PMS, said artificial intelligence will increasingly handle tasks such as data analysis and portfolio comparisons, but human skills remain central to the profession.

“The question is not whether AI will disrupt the industry, but whether advisors choose to fight it or work alongside it,” Rego said.

Jain iterated the role of advisors is evolving from product distributors to financial and behavioural coaches, helping investors navigate complex decisions around wealth creation, taxation and succession planning.