According to a recent press release by ICRA Analytics, 47.7% of the mutual fund industry's assets are now invested directly. This shift indicates a growing trend among investors to bypass traditional intermediaries and manage their investments independently. The data, analyzed by ICRA Analytics, also reveals that 45.96% of investments come through Non-Associate Distributors.

The report highlights a significant preference for direct investment among specific investor groups. Banks and Foreign Institutional Investors (FIIs) overwhelmingly favor the direct route, with approximately 95.45% of their investments made directly. High Net Worth Individuals (HNIs) are also increasingly opting for direct investments, with nearly 28.90% of their assets invested in this manner.

Retail investors are also showing a growing inclination towards direct investments. As of September 2025, around 27.37% of retail investors have chosen the direct route. However, a significant portion (65.30%) still prefers to invest through Non-Associate Distributors. This suggests that while self-directed investing is gaining traction, intermediaries continue to play a crucial role in guiding retail investors.

The increasing participation from smaller towns and cities is also noteworthy. Assets under Management (AUM) from locations beyond the top 30 cities (B30 locations) reached ₹14.50 trillion in September 2025, a 2.6% increase from ₹14.14 trillion in August 2025. On a year-on-year basis, this represents a robust growth of 15%, underscoring the rising significance of non-metro investors in the Indian mutual fund landscape. B30 locations now contribute 19% of the mutual fund industry's total assets. In contrast, assets from the top 30 cities (T30 locations) have also shown healthy annual growth of 14%.

Interestingly, investment preferences differ between metro and non-metro investors. Investors in B30 locations predominantly favor equity assets, with nearly 76.60% of their holdings in equity schemes and 9.12% in balanced schemes. Debt-oriented funds constitute approximately 11.67% of B30 investments, whereas the same accounts for 30.39% in T30 markets.

Institutional investment remains concentrated in T30 locations, accounting for 95.07% of the total. Individual investors from B30 locations held 27.52% of the total assets, while institutional investors from the same region held only 4.93%.

The rise in direct investments can be attributed to increasing investor awareness, greater comfort with digital investment platforms, and a broadening of India's investor base beyond traditional urban centers. Analysts believe that this trend could further diversify the industry and boost long-term growth prospects. ICRA Analytics offers cloud-based solutions for mutual fund research and analysis. These solutions provide a comprehensive view of the Indian mutual fund industry, assisting asset management companies, distributors, wealth managers, and banks.