India’s mutual fund industry grows rapidly but faces unique challenges in long-term maturity

With assets nearing ₹82.22 lakh crore and a focus on sustainable growth, Invesco’s Saurabh Nanavati highlights the opportunities and obstacles that define India’s evolving mutual fund market, emphasising process-driven strategies and geographic expansion amid rising investor participation.

India’s mutual fund industry has moved from being a promising frontier to a market of real scale, with assets now close to ₹82.22 lakh crore, or about $986 billion, according to the Association of Mutual Funds in India. Yet Saurabh Nanavati, chief executive of Invesco in India, argues that the sector is still far from mature, with investor participation expanding but still underserving a vast population. That combination of size and underpenetration, he says, is what makes the opportunity so compelling.

Nanavati has spent nearly two decades building Invesco’s domestic business after joining what was then Religare Asset Management in 2007. Invesco later took control in stages and the firm has since developed into a broad platform across equity, debt and exchange-traded funds. The company says it now manages close to $18 billion in India, serves about 3.8 million retail clients and operates in 65 cities.

A central part of Nanavati’s philosophy is that the business should not depend on a single high-profile fund manager. Instead, he has tried to build an organisation around repeatable investment discipline, team accountability and consistency across market cycles. In a country where personality often carries outsized influence, he believes a process-led approach is the only way to create something durable.

That insistence on staying power matters because India has often proved unforgiving to foreign entrants. Nanavati says many overseas asset managers came in, struggled to build scale and eventually left. The market is now larger and more developed than it was a decade ago, but he says the lesson remains the same: firms must survive long enough to benefit from the industry’s growth.

The growth itself has been striking. AMFI says the industry’s AUM rose from ₹13.81 trillion in 2016 to ₹82.22 lakh crore by June 2026, while folios reached 278.6 million. A Motilal Oswal study cited by The Economic Times says AUM expanded more than sixfold over the past decade, driven by regulation, digital distribution and rising investor participation. In 2025 alone, the industry added roughly ₹14 lakh crore, helped by strong systematic investment plan inflows and a broader shift towards market-linked investing.

Nanavati says that scale changes the demands on Invesco’s investment engine. A decade ago, a team could reasonably follow 150 to 200 listed companies. Today, he says the universe is closer to 600 and may rise to 800 as more Indian firms reach institutional relevance. That means more analysts, more coverage and tighter controls to make sure the process remains consistent as assets grow.

The broader opportunity is also changing geographically. Nanavati wants Invesco to deepen its reach beyond major cities and widen its product range, including pensions and business linked to GIFT City, India’s international financial centre. He sees that centre as a possible bridge between India’s still-fragmented domestic regime and the global investment ecosystem, particularly as Indian investors become more international in their ambitions.

For all the optimism, Nanavati is clear that valuation still matters. India’s long-term earnings potential is attractive, he says, but the market already prices in a good deal of that promise. The task for investors is to distinguish between structural growth and overpaying for it. In his view, that is where discipline, patience and scale matter most.