The COVID-19 pandemic fundamentally reshaped India's investment landscape, according to Kailash Kulkarni from HSBC Mutual Fund. As reported by The Economic Times, the crisis revealed that traditional assets like real estate were not as liquid as investors believed. "People realised that liquidity has a cost. You had a house, but you could not sell it. Businesses were shut, salaries stopped for some people, and money was needed urgently," Kulkarni explained. This experience prompted many households to reconsider their savings allocation, with mutual funds emerging as a preferred alternative due to their ease of redemption and accessibility. The experience taught investors that real estate was not easy to unlock as they had thought earlier, driving serious money into mutual funds.
Technology has been the primary catalyst for financial inclusion, dramatically reducing onboarding times to allow investors to complete transactions within minutes. According to Kulkarni, while technology was a powerful enabler, the real catalyst was investors' growing appreciation for liquidity. "Clients told us that when they needed money, they could redeem their mutual fund units immediately. In some cases, they could not even go to a bank to redeem a fixed deposit because branches were inaccessible," he noted. This practical experience drove serious money into mutual funds, reflected in the sharp acceleration of SIP growth since 2020. Digital platforms have made investing simpler and more accessible than ever before, with younger investors who are more adept at using fintech apps able to buy or sell mutual funds with the same ease as ordering an Uber.
Market volatility has tested investor conviction, particularly among younger participants who entered the market after 2020. However, Kulkarni believes the industry's response has been encouraging. "Ten years ago, if these kinds of choppy markets had existed, I can guarantee you the sell button would have been hit very often. Now investors do not hit the sell button immediately; they consult," he observed. Younger investors, who are more adept at using fintech apps, can buy or sell mutual funds with the same ease as ordering an Uber. However, he acknowledges that "these are the people who get shocked quickly when volatility happens." Access to historical market data has helped investors stay invested through difficult periods, with Kulkarni noting that units accumulated at lower levels eventually generate strong returns when recovery comes. He emphasizes the importance of adapting communication for younger audiences, stating that "investors under 30 do not have the patience to listen to a 30-minute explanation. You have to communicate through short videos, reels, and concise messages that they can absorb quickly."
While assets under management remain concentrated in major metropolitan centres, transaction data reveals a different growth pattern. According to Kulkarni, SIP registrations from cities beyond the top 30 urban centres are growing faster than those from major metros. "Today, the number of SIPs coming from beyond the top 30 cities is outpacing SIPs from the top 30 cities," he explained. When looking at the number of investors and transactions instead of only AUM, the real change happening becomes apparent. While wealth levels in cities like Mumbai, Delhi, and Bengaluru remain higher, participation is broadening rapidly across smaller towns and cities, indicating a significant shift in investment demographics.
Despite growing awareness, mutual fund participation remains relatively low with only 9.5% of households actively investing according to SEBI's Investor Survey 2025, even though 63% are aware of securities market products. Kulkarni believes the industry bears responsibility for this gap, noting that communication remains too technical and insufficiently localized. "We are too technical in our conversations. We talk about ratios, abbreviations, and globally used terms. The retail investor does not understand that," he stated. He argues that "we are still largely communicating in English and to some extent Hindi. We are not communicating enough in Marathi, Bengali, Tamil, Kannada, Assamese, or other regional languages. People want simple answers. They want to know whether they can earn better returns than a fixed deposit and what kind of safety is involved." Looking ahead, Kulkarni remains highly optimistic about the growth potential of India's mutual fund industry. "We were in low single digits in 2021 and have now reached low double digits. Can we reach 30% or 40% over the next ten years? Why not?" He cited improving investor engagement, technological advancements, stronger distributor networks, and awareness campaigns by industry bodies as key drivers of future growth, concluding with "I am a super bull. Our industry will do exceedingly well."
