An Investor Education and Awareness Initiative by SBI Mutual Fund
The investment landscape in India has undergone a significant transformation with increased financialization of savings. From traditional investments to modern financial instruments, there has been a paradigm shift in investor behaviour, who are wanting wealth creation through participation in capital markets.
Once dominated by traditional instruments like fixed deposits, the market has evolved to embrace modern financial products such as mutual funds, REITs, and ETFs. While mutual fund adoption was initially concentrated in metropolitan and Tier-1 cities, recent trends indicate a significant shift—Tier-2 and Tier-3 cities (classified as B30 or “Beyond Top 30” cities) are emerging as powerful growth engines for the mutual fund industry.
B30 Cities Gaining Ground
According to the Association of Mutual Funds in India (AMFI), B30 locations accounted for 18% of the mutual fund industry’s total assets under management (AUM) as of July 2025. AUM from these regions rose from ₹13.80 lakh crore in June 2025 to ₹14.20 lakh crore in July 2025, marking a 3% monthly increase and a robust 21% year-on-year growth from ₹11.77 lakh crore in July 2024. This surge reflects deepening financial penetration and growing investor confidence in smaller towns. (Source: T30 v/s B30 report)
Key Trends Driving Growth
Monthly inflows through Systematic Investment Plans (SIPs) have shown consistent growth, even amid market volatility, indicating a strong investor preference for disciplined, long-term investment strategies irrespective of market conditions. This shift reflects increasing financial maturity and inclusion across diverse demographics.
1. Expanding Investor Base
Investor participation continues to broaden, particularly in non-metro regions. The total number of mutual fund folios rose by 32% year-on-year, reaching 23.45 crore in FY25 from 17.78 crore in FY24. Growth and equity-oriented schemes saw a 33.4% increase in folios, rising to 16.38 crore. (Source: AMFI Annual Report)
2. SIPs Fuelling Long-Term Investing
Systematic Investment Plans (SIPs) remain a cornerstone of retail participation. Contributions surged 45.24% year-on-year to ₹2.89 lakh crore in FY25. New SIP registrations rose to 6.80 crore (from 4.28 crore in FY24), while active SIP accounts reached 8.11 crore—a 27.17% increase. This reflects growing investor discipline and a shift toward long-term wealth creation. (Source: AMFI Annual Report)
3. Demographic Shifts
Age: Investors aged 25–40 dominate new folio registrations.
Income: Middle-income groups are leading SIP adoption, typically investing ₹500–₹2,000 monthly.
Gender: More women from smaller towns are entering the investment space, supported by digital platforms and outreach programs.
Geography: States like Chandigarh, Himachal Pradesh, and Dadra & Nagar Haveli report SIP AUM shares exceeding 40% of total MF AUM, while regions like Mizoram, Delhi, and Maharashtra remain below 20%. (Source: AMFI Annual Report)
What’s Fuelling the Surge?
Increased Investor awareness efforts by AMFI and other Mutual Fund Houses and growing digital adoption have played a pivotal role in this evolution, driving financial literacy and increasing access to investment platforms. As awareness has grown, so has participation—particularly in mutual funds.
. Several structural and behavioural factors are accelerating mutual fund adoption in smaller cities:
Digital Penetration: Affordable smartphones and data plans have made investing accessible to millions beyond major cities. Government’s digitisation provisions have been one of the major enablers for easy access to investment products across the country.
Fintech Expansion: Multiple fintech applications like Groww, Zerodha, and Paytm Money have simplified investing for first-time users in Tier-2 and Tier-3 cities.
Rising Aspirations: Young professionals and entrepreneurs in smaller towns are increasingly seeking avenues for wealth creation beyond traditional savings. They are looking to use mutual funds as solutions to plan and achieve their goals.
Towards A More Inclusive Financial Future
The rise of mutual fund investments in Tier-2 and Tier-3 cities marks a pivotal shift in India’s financial ecosystem. These regions are no longer passive participants but active contributors to the industry’s growth. With increasing digital access, targeted financial literacy efforts, and evolving investor mindsets and innovation in offerings, the mutual fund industry is becoming more inclusive and geographically diversified.
As this trend continues, it not only democratizes wealth creation but also strengthens the foundation for a more resilient and balanced financial future for India.
Investors should deal only with registered Mutual Funds, details of which can be verified on the SEBI website (https://www.sebi.gov.in) under ‘Intermediaries/Market Infrastructure Institutions’. Please refer to website of mutual funds for process of completing one-time KYC (Know Your Customer) including process for change in address, phone number, bank details etc. Investors may lodge complaints on https://scores.sebi.gov.in/ against registered intermediaries if they are unsatisfied with their responses. SCORES facilitates you to lodge your complaint online with SEBI and subsequently view its status.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
