Do HNIs Still Trust Mutual Funds? What the Data Says
Do HNIs Still Trust Mutual Funds? What the Data Says
Jul 14, 2025
For decades, mutual funds have been a cornerstone of wealth building for retail investors in India. But as India’s high-net-worth individuals (HNIs) become more sophisticated and globally exposed, many advisors and asset managers are asking: Do HNIs still trust mutual funds in 2025?
With India expected to have over 9 lakh HNIs by 2027 (Knight Frank Wealth Report 2024), understanding how this segment views mutual funds is critical for wealth managers and financial product providers.
The Historical Appeal: Simplicity and Accessibility
Mutual funds have long appealed to HNIs because they offer:
Diversified exposure to equities, debt, or hybrid strategies.
Professional fund management.
Relatively high liquidity and tax efficiency.
In earlier decades, HNIs relied heavily on these products for core portfolio allocations, particularly because direct access to alternative and global markets was limited.
The Shift: Rise of Alternatives and Direct Equity
Over the last five years, the data has shown a clear shift. According to AMFI (Association of Mutual Funds in India) and various private wealth reports:
HNIs' share in total mutual fund AUM has dropped from ~54% in 2015 to around 43% in 2024.
Meanwhile, allocations to alternative assets (PE/VC, hedge funds, private credit) have grown to over 25% of HNI portfolios.
Direct equity and PMS (Portfolio Management Services) now account for nearly 35% of HNI equity exposures.
Why?
Desire for higher alpha (excess returns) beyond market benchmarks.
More control and customization.
Access to niche and private market opportunities previously unavailable.
Trust vs. Preference: Do HNIs Actually Distrust Mutual Funds?
Interestingly, HNIs don’t necessarily distrust mutual funds. The data suggests they still see them as stable, well-regulated vehicles for certain goals:
Core fixed-income allocations.
Liquid and short-term fund strategies for parking surplus capital.
Tax-saving funds (ELSS) when advantageous.
However, for wealth creation and legacy-building, they increasingly prefer vehicles with higher upside potential and bespoke strategies.
Global Diversification: Another Factor
As HNIs globalize their wealth, mutual funds that are largely domestic in focus (or limited by SEBI’s overseas investment caps) become less attractive.
In 2024, over 60% of Indian UHNIs had some allocation to offshore funds or global equity mandates, compared to less than 25% a decade ago (Bain & Company India Wealth Report).
Technology & Transparency: Not Enough?
While digital platforms have enhanced mutual fund accessibility and transparency, these improvements haven’t fundamentally changed HNIs' shift towards more direct and alternative investment routes.
HNIs increasingly demand:
Real-time visibility into portfolio companies or underlying assets.
Active involvement in decision-making, especially in private markets.
🌟 Final Thoughts
The data is clear: HNIs still trust mutual funds — but they no longer depend on them as their primary wealth-building engine.
Instead, mutual funds are now seen as a tactical, complementary tool within a broader, more sophisticated investment strategy that includes private equity, direct global equities, venture investments, and alternative assets.
For wealth managers, understanding this nuance is essential: It isn’t about convincing HNIs to "trust" mutual funds again, but about positioning them correctly as part of an integrated, goal-based portfolio.
🚀 Want deeper insights into HNI investment behavior?
Affluense.ai empowers you with data-backed intelligence on India’s most affluent individuals — including where they invest, how they think, and what they value most. Discover more at Affluense.ai.
For decades, mutual funds have been a cornerstone of wealth building for retail investors in India. But as India’s high-net-worth individuals (HNIs) become more sophisticated and globally exposed, many advisors and asset managers are asking: Do HNIs still trust mutual funds in 2025?
With India expected to have over 9 lakh HNIs by 2027 (Knight Frank Wealth Report 2024), understanding how this segment views mutual funds is critical for wealth managers and financial product providers.
The Historical Appeal: Simplicity and Accessibility
Mutual funds have long appealed to HNIs because they offer:
Diversified exposure to equities, debt, or hybrid strategies.
Professional fund management.
Relatively high liquidity and tax efficiency.
In earlier decades, HNIs relied heavily on these products for core portfolio allocations, particularly because direct access to alternative and global markets was limited.
The Shift: Rise of Alternatives and Direct Equity
Over the last five years, the data has shown a clear shift. According to AMFI (Association of Mutual Funds in India) and various private wealth reports:
HNIs' share in total mutual fund AUM has dropped from ~54% in 2015 to around 43% in 2024.
Meanwhile, allocations to alternative assets (PE/VC, hedge funds, private credit) have grown to over 25% of HNI portfolios.
Direct equity and PMS (Portfolio Management Services) now account for nearly 35% of HNI equity exposures.
Why?
Desire for higher alpha (excess returns) beyond market benchmarks.
More control and customization.
Access to niche and private market opportunities previously unavailable.
Trust vs. Preference: Do HNIs Actually Distrust Mutual Funds?
Interestingly, HNIs don’t necessarily distrust mutual funds. The data suggests they still see them as stable, well-regulated vehicles for certain goals:
Core fixed-income allocations.
Liquid and short-term fund strategies for parking surplus capital.
Tax-saving funds (ELSS) when advantageous.
However, for wealth creation and legacy-building, they increasingly prefer vehicles with higher upside potential and bespoke strategies.
Global Diversification: Another Factor
As HNIs globalize their wealth, mutual funds that are largely domestic in focus (or limited by SEBI’s overseas investment caps) become less attractive.
In 2024, over 60% of Indian UHNIs had some allocation to offshore funds or global equity mandates, compared to less than 25% a decade ago (Bain & Company India Wealth Report).
Technology & Transparency: Not Enough?
While digital platforms have enhanced mutual fund accessibility and transparency, these improvements haven’t fundamentally changed HNIs' shift towards more direct and alternative investment routes.
HNIs increasingly demand:
Real-time visibility into portfolio companies or underlying assets.
Active involvement in decision-making, especially in private markets.
🌟 Final Thoughts
The data is clear: HNIs still trust mutual funds — but they no longer depend on them as their primary wealth-building engine.
Instead, mutual funds are now seen as a tactical, complementary tool within a broader, more sophisticated investment strategy that includes private equity, direct global equities, venture investments, and alternative assets.
For wealth managers, understanding this nuance is essential: It isn’t about convincing HNIs to "trust" mutual funds again, but about positioning them correctly as part of an integrated, goal-based portfolio.
🚀 Want deeper insights into HNI investment behavior?
Affluense.ai empowers you with data-backed intelligence on India’s most affluent individuals — including where they invest, how they think, and what they value most. Discover more at Affluense.ai.