Small Town GenZs Trump Delhi And Mumbai in Driving India's Mutual Fund Boom

Mutual fund investments continue to retain their popularity in 2025. The total industry Assets Under Management (AuM) surpassed Rs 75.35 lakh crore in July 2025. Notably, the total AuM of the mutual fund industry has grown from Rs 27.12 trillion in 2020 to its current level, indicating a near threefold increase in a span of five years. This tremendous growth has come on the back of increasing retail participation in the mutual fund industry.

A recent study by PhonePe Wealth, a subsidiary of digital payments platform PhonePe, shows that this rush is driven by young investors. Young investors aged between 18 and 30 make up as much as 48 per cent of the mutual fund investor base as per the study. Surprisingly these young investors do not come from India' metro cities but rather from Tier 2 Indian cities.

Notably, the study involved an analysis of 6 lakh mutual fund investors, which was conducted between August 1, 2024 and July 31, 2025.

Tier 2 Youth Spur Mutual Fund Rush

Data from the study showed that 81 per cent of Gen-Z investors who invest in mutual funds come from cities such as Jodhpur, Raipur, Vishakhapatnam, Gorakhpur, Mysore, Jamshedpur and Kolhapur. This indicates the increasing popularity of mutual funds and the penetration of financial awareness beyond the country's metros. Additionally, the study also found that Gen Z mutual fund investors show a strong preference for equity-oriented mutual fund schemes and investing in a disciplined manner.

Gen Z Bullish On Equity-Oriented Funds

In the month of July, the net inflow in equity mutual fund schemes jumped 28 per cent to Rs 42,702.35 crore from Rs 33,357.27 crore in June 2025, according to AMFI data. This surge comes even as the stock market has continued to trade in a flip-flop in the past few months amid the imposition of trade tariffs by the US and multiple geopolitical conflicts, such as the Russia-Ukraine conflict and the India-Pakistan escalation.

The data showed that despite the uncertainty, as many as 95 per cent of Gen Zs began their mutual fund investment with equity oriented mutual funds. Additionally, the Value and Flexicap categories of mutual funds are also popular among investors under 30 years of age, apart from midcap and small cap schemes, which are popular among investors.

Discipline In The Era Of Instant Gratification

Despite living in an age defined by quick commerce and instant gratification, Gen Zs prefer investing in a consistent and disciplined manner according to the study. The study found that 92 per cent of Gen Z investors prefer to invest on a monthly basis through Systematic Investment Plans with an average transaction value of approximately Rs. 1000.

Notably, in the month of July 2025, the total number of contributing SIP accounts hit an all-time high at 911.18 lakh. On the other hand, the SIP contribution also stood at Rs 28,464 crore in the said period. The mutual fund SIP stoppage ratio, which compares the number of SIPs which have been stopped to the number of fresh SIPs, also declined drastically in July. The ratio came down to 62.66 per cent in July, easing significantly from 77.77 per cent in June 2025.

Venkat N Chalasani the Chief Executive, AMFI also highlighted that the growth in SIP accounts is indicative of disciplined investing even amid volatility.

"SIP contributions hit a new record of Rs 28,464 crore, and contributing accounts grew 5.4 per cent to 9.11 crore — clear evidence of disciplined investing even amid volatility. AMFI remains committed to investor education and fostering a transparent, well-regulated ecosystem that supports long-term wealth creation," Chalasani said.