The latest Association of Mutual Funds in India (AMFI) data showed SIP contributions remained resilient, extending a trend that has helped cushion domestic equity markets during periods of sharp swings.
Motilal Oswal Asset Management Company say this reflects a gradual change in how Indian households approach investing.
From market timing to disciplined investing
According to Akhil Chaturvedi, Executive Director and Chief Business Officer at Motilal Oswal Asset Management Company, SIP investing is becoming a long-term savings habit rather than a vehicle for chasing short-term market returns.
He attributes this to India’s still-low allocation to equities. Equities account for roughly 6% of household assets in India, compared with about 48% in the US, suggesting there remains considerable room for financial savings to shift towards market-linked investments over time.
While individual sectors periodically witness sharp rallies followed by corrections, Chaturvedi said the broader market does not exhibit signs of widespread froth.
Why small-cap and thematic funds continue to attract money
Small-cap and thematic funds have drawn strong investor interest over the past few years despite concerns around valuations.
According to Chaturvedi, investors are using these categories to gain exposure to high-growth businesses and emerging sectors that often have limited representation in benchmark-driven portfolios.
Data shared by Motilal Oswal AMC shows net inflows have remained sizeable.
| Year | Small-cap funds | Thematic funds |
| 2023 | ₹43,291 crore | ₹31,744 crore |
| 2024 | ₹34,874 crore | ₹1,76,915 crore |
| 2025 | ₹52,321 crore | ₹38,145 crore |
He said valuation concerns should be assessed at the stock and sector level rather than across an entire category, adding that fund managers continue to differentiate between pockets where valuations have become stretched and areas where growth prospects remain intact.
Smaller cities are changing the investor base
Another trend that fund houses are watching is the rising participation of first-time investors from tier-2 and tier-3 cities.
According to Chaturvedi, younger investors are demonstrating greater willingness to invest in market-linked products than previous generations. He said this shift suggests SIP investing is increasingly becoming a long-term financial habit rather than a temporary response to rising markets.
