Bharat Leads Mutual Fund Growth As Smaller Cities Outshine Metros

India’s mutual fund industry is witnessing a remarkable shift in investment patterns, with smaller towns and cities taking centre stage.

In the post-COVID period, retail participation has surged, and mutual funds, one of the most popular investment vehicles, are seeing assets swell significantly faster in B30 locations than in metro areas.

Notably, less prosperous states are now outpacing some of the traditionally stronger markets. Uttar Pradesh has overtaken Tamil Nadu in total mutual fund assets, Rajasthan has surpassed Telangana, and Madhya Pradesh has moved ahead of Kerala.

This trend underscores the increasing penetration of market-linked schemes in regions once considered peripheral to India’s financial mainstream.

B30 Growth Outpaces T30 Performance

According to the Association of Mutual Funds in India (AMFI), as of June 2025, total mutual fund assets stood at nearly ₹75 lakh crore. Of this, ₹14 lakh crore or 18.5 per cent originated from B30 cities.

Over the past five years, while T30 cities recorded a compound annual growth rate (CAGR) of 23 per cent in assets under management (AUM), B30 cities posted an even more impressive 28 per cent CAGR.

The industry as a whole grew at a CAGR of 24 per cent during the same period.

This acceleration can be attributed to increased digital access, rising financial literacy, and aggressive outreach by mutual fund companies.

Post-pandemic, investors in smaller cities have shown greater willingness to explore equities and hybrid schemes, moving beyond traditional savings instruments.

Asset managers have capitalised on this by expanding distribution networks, leveraging fintech partnerships, and offering tailored investment solutions.

Industry experts believe that this growth from smaller cities is reshaping India’s investment geography.

The trend suggests a democratisation of wealth creation opportunities, with more retail investors from non-metro regions participating in capital markets.

As financial awareness deepens, the contribution of B30 locations to total mutual fund AUM is expected to rise further in the coming years.

With a growing appetite for market-linked products and improving investor education, the momentum from B30 cities shows no signs of slowing.

This shift is not only diversifying the investor base but also strengthening India’s financial ecosystem. In the years ahead, the continued expansion into smaller towns could prove pivotal in sustaining the mutual fund industry’s robust growth trajectory.

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