India's mutual fund industry has experienced remarkable expansion, with total assets under management reaching ₹85 lakh crore according to SEBI's Amarjeet Singh. As reported by Mint, the industry crossed ₹10 lakh crore in 2014 and has grown more than eightfold in little over a decade. The distributor network has also expanded significantly, with the number of active AMFI-registered distributors rising from 2.4 lakh to 3.4 lakh over the past five years. Singh emphasized that distributors serve as the bridge between households and capital markets, playing a critical role in guiding and handholding investors throughout this growth period.
Mutual fund distributors demonstrate significant influence on investor behaviour, particularly during market volatility. According to SEBI's analysis, SIP assets now account for more than 21% of the industry's total assets, with around 34% of SIP assets in regular plans held for more than five years, compared with 20% in direct plans. Singh highlighted that distributors can act as a 'behavioural anchor, particularly during periods of market volatility', helping investors avoid impulsive decisions such as stopping SIPs, redeeming investments, or chasing recently performing schemes. By providing perspective, distributors enable investors to stay focused on long-term goals rather than allowing short-term market movements to influence their investment decisions.
The mutual fund industry's reach has extended beyond major cities, with B-30 cities now accounting for almost 19% of total mutual fund industry AUM, up from around 16% five years ago. As reported by Mint, distributors play a crucial role in expanding mutual fund participation in smaller towns and among first-time investors by explaining how mutual funds work, helping investors understand suitable products, building awareness about market-linked investments, and supporting them through different market cycles. The industry has also seen substantial growth in investor participation, with mutual fund folios crossing 27 crore and more than 6 crore unique mutual fund investors.
SEBI is creating new opportunities for distributors through simplified certification frameworks and proposed services. According to Mint, SEBI, in consultation with NISM, has simplified the certification framework for Specialized Investment Funds (SIFs), allowing distributors with relevant certification to distribute both mutual funds and SIFs. The regulator is also consulting on a proposed mutual fund-only Portfolio Management Services (MF-only PMS) framework, featuring a minimum investment of ₹25 lakh compared with ₹50 lakh for conventional PMS. Singh indicated this framework could enable larger distributors to manage overall mutual fund portfolios, including asset allocation, scheme selection, and ongoing portfolio management, moving beyond recommending individual schemes.
SEBI's Singh emphasized that distribution should remain focused on investor interests rather than simply asset or customer acquisition. As reported by Mint, he stressed that 'ethical distribution therefore has to remain at the centre of the investor relationship'. For investors, this means asking whether distributors clearly explain risks and commissions, recommend products suited to their needs, and remain engaged after the sale. Singh also warned about the risk of mis-selling, including cases where investors may not immediately realize that a product was unsuitable, highlighting the importance of ethical distribution practices in maintaining investor trust and confidence in the mutual fund distribution system.
