Mutual Fund Industry Earnings Grow in FY26 as Asset Expansion Lifts Revenue

With a continuous growth in assets under management, India’s mutual fund industry has been able to earn profits since even the largest asset managers have been making a sizable contribution towards the profitability of the industry. According to an Equirus study on the performance of more than 20 asset management companies (AMCs), profits after tax (PAT) of the industry grew 13.8% year-on-year to ₹17,285 crore from ₹15,194 crore. 

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Three players were at the centre of the profit pie for the industry. The contributions made by HDFC AMC, ICICI Prudential AMC and SBI Funds Management accounted for 53.4% of the total profits made by the industry in FY26. ICICI AMC has made up 19.2%, SBI AMC 17.7% and HDFC AMC 16.5% of the industry PAT. 

The rise in profits came alongside growth in industry assets. Quarterly average assets under management (AQAAUM) increased 19.4% to ₹77.98 lakh crore during FY26. The value of the equity assets stood at ₹45.28 lakh crore, which recorded an increase by 19.3% compared to the previous fiscal year and still accounted for 58.1% of the total industry assets. It was highlighted that there has been an increase in the equity AQAAUM at a CAGR of 31.3% in the last five years. 

With the growth in the assets, the operating income also witnessed an upward trend. Operating income grew 19% to ₹32,901 crore and mutual fund fee income by 20.2% to ₹29,735 crore. In spite of the gradual change in the industry to lower fee yields, the mutual fund fee yield remained steady at around 38 basis points in FY26. 

The Equirus analysis also showed that management fees grew faster than several other parts of the industry's fee structure. Across the 21 AMCs covered in the study, management fees rose 19.2% to ₹28,469 crore. Distributor commissions grew 13.1% to ₹29,637 crore, while registrar and transfer agent (RTA) fees increased 5.5% to ₹2,198 crore.  

Stronger revenue growth and a slower rise in expenses supported operating profitability. Industry EBITDA rose 21.1% to ₹20,433 crore. EBITDA margin improved to 62.1%, compared with 61% in FY25. Total expenses increased 15.9% to ₹13,328 crore, while employee expenses rose 18.5% to ₹6,789 crore.  

Though there was growth in terms of earnings from operations, it could not completely translate into profit growth due to the reduction in other income. As per the report, other income reduced by 17.5% to ₹3,390 crore from ₹4,109 crore in FY25. This was due to lower mark-to-market gains. The total income increased by 14.3% to ₹36,290 crore, whereas, profit before tax increased by 13.4% to ₹22,962 crore. 

Apart from this, the domination of the largest fund houses was visible even in the following case. Over 80% of mutual fund revenues for SBI AMC, ICICI AMC and HDFC AMC were derived from equity assets in FY26. Among these, ICICI AMC had the highest equity management-fee yield of 63.5 basis points. Next to it was HDFC AMC with a yield of 59.6 basis points, followed by SBI AMC at 58.2 basis points. 

The report also observed that the combined profit share of these three fund houses has increased over time. Their contribution to industry PAT stood at 53.4% in FY26, compared with roughly 46% in FY21.