Collects household and institutional money into SEBI-regulated schemes, invests it across shares and bonds, and charges a yearly management fee within SEBI's expense-ratio caps. Distributors, platforms and registrars are paid out of or alongside this fee.
Why it matters
Mutual funds are how most Indians now own shares: SIPs bring in over ₹32,000 Cr a month and over 10 crore SIP accounts run (AMFI, Sep 2026). AMCs are capital-light, cash-rich and pay most of their profit out - but their margin is set by SEBI's fee rules, which keep falling as funds grow.
Where the value pool sits
Industry assets were ₹82.6L Cr in Sep 2026 (₹73.7L Cr at Mar 2026, AMFI). Equity funds earn the most - roughly 3-4 times the fee yield of debt and liquid funds - so profit tracks equity assets and markets more than total AUM. The top five houses (SBI, ICICI Prudential, HDFC, Nippon, Kotak) manage well over half the industry's assets.
Key drivers
SIP habit: record monthly flows and lengthening SIP tenures
Household shift from deposits, gold and property into financial assets
Rising markets lift AUM and fees with no extra cost
New products: SIFs (specialised investment funds), passive and international funds
Potential bottlenecks
SEBI's expense-ratio caps fall as a scheme grows (telescopic slabs), and the April 2026 rules cut what schemes may pay brokers
Distribution reach outside the top 30 cities still depends on banks and individual distributors
Passive funds and direct plans squeeze fees on large-cap and index products
Investor metrics to watch
Equity QAAUM market share (AMFI quarterly)
Monthly SIP flows and SIP market share
Revenue yield on AUM (bps) and its trend
Operating profit as % of AUM
Share of AUM from B-30 (smaller) cities and from direct plans