How India is investing in mutual funds: Longer holding periods, rising equity exposure and changing investor behaviour
Indian mutual fund investors are holding investments for longer, women are taking greater equity exposure and regular-plan investors have a longer holding-period profile than direct-plan investors. At the same time, the industry’s asset mix has shifted sharply from debt towards equity and passive funds.
The Indian mutual fund investor has changed materially over the past five years. The latest AMFI-Crisil Mutual Fund Factbook 2026 shows longer holding periods, greater participation by women and a significant shift in the industry’s asset allocation.
Investors are staying invested for longer
The share of mutual fund assets held for more than five years increased to 19.2% in March 2026 from 7.7% in March 2021. Among SIP investments, the shift has been sharper. The share of assets held for more than five years rose from 12.3% to 31%, while the share held for less than a year fell from 37% to 21.1%.
Akshay Sapru, Group CEO, FundsIndia, said the nearly three-fold rise in the share of assets held for more than five years reflects a change in how Indian investors behave.
One reason is the growing SIP habit. “A SIP is, by design, a long-holding instrument,” Sapru said. As SIPs have become the default way of investing for many Indians, longer holding periods have followed.
He also attributed the shift to advisor- and platform-led efforts to move investors away from performance-chasing and towards staying invested through market cycles.
Women are taking more equity exposure
Women’s mutual fund AUM increased from ₹5.84 lakh crore in March 2021 to ₹15.88 lakh crore in March 2026. Equity’s share rose from roughly 49% to 64%, while debt’s share fell from around 24% to 8%.
The age-wise data shows an even sharper difference. Women below 25 have 88.3% of their MF AUM in equity, compared with 76.2% for those aged 25–44, 64.8% for those aged 45–58 and 51.2% for women above 58.
The allocation to hybrid funds moves in the opposite direction, rising from 5.4% among women below 25 to 29.6% among women above 58. The data therefore shows a clear age-linked difference in portfolio construction.
Regular-plan investors are holding for longer
Regular-plan investors have a higher share of assets held for more than five years than direct-plan investors. In March 2026, the proportion was 23.5% for regular plans versus 14% for direct plans. Among SIP investments, the gap was wider at 34.4% versus 19.9%.
Sapru said the data highlights the behavioural role of an adviser.
“A direct investor is, by definition, on their own when markets turn,” he said. A regular-plan investor, by contrast, has someone who can intervene before an investor makes a decision based on a difficult market month.
Equity is taking a larger share of mutual fund portfolios
The industry’s asset mix has changed substantially. Equity schemes accounted for 43.4% of MF AUM in March 2026, compared with 31.2% in March 2021. Debt’s share fell from 42.3% to 22.4%.
Sapru said the shift reflects changing risk appetite as a younger, digitally native investor base has entered the market. He also pointed to the change in taxation of debt funds.
Debt funds had earlier enjoyed a tax advantage over fixed deposits, with gains on investments held for more than three years taxed at 20% after indexation. The Union Budget 2023 changed the treatment for new investments in specified debt funds, with capital gains taxed according to the investor’s slab rate irrespective of the holding period.
Sapru said greater awareness of asset allocation is another factor, with investors increasingly understanding the role each asset class can play in a portfolio.
What the shift from debt to equity means for investors
The decline in debt allocation does not mean investors should automatically move more money into equity.
Sapru said investors with goals within three to five years, those without an adequate emergency reserve and those whose perception of their risk tolerance was formed during a bull market should be particularly cautious about increasing equity exposure.
“Equity doesn’t respect your calendar,” he said. A market correction can occur when an investor needs the money, potentially forcing a sale at an unfavourable time.
The decline in debt allocation can also create problems if investors are abandoning debt to chase equity returns rather than because their financial goals have changed.
“Debt in a mutual fund portfolio isn’t dead weight waiting to be replaced by better returns elsewhere,” Sapru said. Debt can provide capital preservation, liquidity and stability when equity markets are weak.
The Bottomline
The longer holding periods are encouraging, particularly among SIP investors, but they should not be interpreted as a reason to take unlimited equity risk. A longer investment horizon can help investors withstand volatility, but the portfolio still needs to match the goal and the investor’s ability to tolerate losses.
