Retail investors' share in mutual fund assets under management has declined for the second consecutive year, falling to 59.5% in March 2026 from 62.2% in March 2024, according to data released by the Association of Mutual Funds in India (Amfi). However, this trend has been offset by a dramatic surge in retail participation at Gujarat International Finance Tec-City (GIFT City), where retail investor count jumped 146% in a single quarter to 8,467 in June 2026 from 3,438 in March. As per Vaibhav Shah, head of products, business strategy, and international business at Mirae Asset Mutual Fund, global markets have done exceedingly well compared to Indian markets, and Indian investors have understood the importance of global diversification, leading to increased participation from retail investors. The focus is now increasingly shifting towards retail investors, with PPFAS, DSP, Tata Mutual Fund and Edelweiss among the fund houses that have launched or introduced retail-focused IFSC funds this year.
The number of investors in such retail schemes rose to 8,467 in the April-June quarter, up from 3,483 in the previous quarter, according to data from the International Financial Services Centres Authority (IFSCA). This marked the first time when the retail audience controlled the biggest piece of the pie in GIFT City's fund management ecosystem, constituting over 52% of the total investors putting money into such international funds. The 14 retail schemes at GIFT IFSC had collectively raised $99.59 million as of 30 June, with $54.13 million raised during the April to June quarter alone. About $68.54 million, or 78.5%, was invested in foreign jurisdictions, while $18.78 million was invested in India. These funds typically invest in global equities and themes with high growth potential, with Edelweiss focusing on Asian growth opportunities and PPFAS targeting US technology stocks. Several other fund houses are also seeking licences to launch retail-focused IFSC schemes, hoping to capitalise on the growing demand.
Heightened volatility and the market correction after September 2024 led to mark-to-market losses, dampening investor interest across segments. The Nifty 50 fell over 5% in the two-year period through March 2024, while the Nifty Smallcap 250 was broadly flat and the Nifty Midcap 150 gained 6%. As of the end of August, the Nifty 50 was down 7.8% for the year while the Sensex had fallen 9.7%, according to Reuters. The benchmark Nifty 50 and Sensex indices are down around 8-10% so far this year, while stock markets in the US, South Korea, Taiwan, and Japan have grown 10-59% in that time. Small and midcap stocks remained volatile between September 2024 and March 2026, with the Nifty Smallcap 250 delivering a return of less than 1% in the two-year period through March 2026. As reported by Aakanksha Shukla, AVP, Wealth Management at Master Capital Services, the decline in retail's share of MF AUM does not necessarily indicate lower retail participation, but rather reflects market movements that impacted retail-heavy portfolios more than institutional allocations.
High networth individuals have continued to increase their share of MF assets, with their share rising from 30.4% in March 2022 to 32.3% in March 2024, before edging up to 32.7% in March 2026. The industry classifies an investment account as an HNI folio if it receives ₹2 lakh or more in a single transaction. According to Aditya Agarwal, co-founder of Wealthy.in, even a relatively small increase in the number of HNI investors leads to substantial inflows because HNI tickets are considerably larger than retail transactions. The changing mix suggests passive investing is gradually drawing a larger pool of affluent individual investors, even as institutional investors continue to dominate the segment.
The HNI shift is far more pronounced in passive funds, with their share of passive-fund AUM almost trebling to 19.9% in March 2026 from 6.6% five years earlier. Corporations remained the dominant investor group but their share fell to 69.6% from 78.4% over the same period, while retail investors' share also declined to 9.1% from 13.4%. Experts attribute the sharp rise in HNI participation to greater familiarity with index funds and exchange-traded funds, as well as increased exposure to gold and silver MF schemes. Gold and silver investments may have provided another boost, with AUM of gold and silver ETFs standing at ₹2.5 trillion in March 2026, up 17-fold from March 2021.
