India’s managed investments industry is poised for rapid expansion through 2030, led by alternative investment funds (AIFs) that have outperformed comparable public market indices and are expected to sustain strong growth as household savings shift decisively towards market-linked products, a February 2026 report by Crisil said.
Crisil’s report, titled The Ascent of Alternatives, projects that total assets of the managed investments industry will rise to Rs 455 lakh crore by March 2030 from Rs 212 lakh crore in March 2025, implying a 2.1-fold increase in five years and nearly fivefold growth compared with March 2020. Managed fund assets already account for about 64 per cent of GDP and are expected to reach 73 per cent by 2030.
The fastest growth is expected in AIFs, which Crisil estimates will expand at around 25 per cent annually over the next five years. AIF commitments rose from Rs 3.70 lakh crore in March 2020 to Rs 13.49 lakh crore in March 2025, clocking the highest compound annual growth rate of about 30 per cent among managed fund categories. More than 1,700 AIFs were registered as of December 2025, with nearly two-thirds launched after April 2021.
Crisil’s performance analysis shows AIFs have delivered superior returns relative to public benchmarks using the public market equivalent (PME+) methodology. Early-stage equity AIFs generated pooled internal rates of return (IRR) of 22.0 per cent compared with 13.7 per cent for the BSE Sensex TRI. Growth and late-stage equity funds delivered 17.0 per cent versus 14.3 per cent for the same benchmark. Debt AIFs returned 14.5 per cent compared with 6.8 per cent for the Crisil Composite Bond Index, while real estate funds generated 8.9 per cent against 7.3 per cent for the bond index.
Distribution data further shows the relative resilience of debt-oriented strategies. Around 70 per cent of debt funds had fully returned investor capital in an average of 4.9 years, compared with about 22 per cent of early-stage equity funds over 7.7 years. Real estate funds also showed stronger capital return profiles than equity-oriented peers.
Crisil said the expansion of alternatives is underpinned by structural drivers, including India’s macroeconomic resilience, rising per capita income and a sustained shift in household savings towards financial assets. India’s gross savings rate, at about 30 per cent of GDP in 2024, remains above the global average of roughly 26 per cent, providing a sizeable pool of domestic capital.
Financialisation has accelerated in recent years. The combined share of mutual funds and equity in annual household savings rose from 4 per cent in 2020 to 15 per cent in 2025. Managed funds have also overtaken traditional time deposits, with assets equivalent to about 106 per cent of outstanding deposits as of March 2025.
Beyond AIFs, other alternative vehicles are gaining scale. Assets under management of real estate investment trusts and infrastructure investment trusts tripled between March 2020 and March 2025 to Rs 7.78 lakh crore. Crisil expects sustained growth, supported by monetisation of operational assets and rising demand for yield-oriented products from insurers, pension funds and retail investors.
Despite strong momentum, Crisil cautioned that the “scale unlock” for alternatives remains constrained by regulatory limits, liquidity considerations and asset-liability management requirements for domestic institutions. To address these bottlenecks, the report recommends product redesign.
“The way forward is centred on product redesign aligned to institutional needs, stronger liquidity and exit pathways, and higher transparency and standardisation through robust disclosures and comparable valuation practices,” the report said.
Crisil also highlighted the need for secondary transfer mechanisms for AIFs, deeper listed-market liquidity for REITs and InvITs, and clearer taxation and regulatory differentiation between fund categories to sustain prudent growth.
If these measures are implemented, Crisil believes alternatives could emerge as a core allocation for domestic high-net-worth individuals and institutional pools, deepening India’s capital markets and reinforcing the shift from physical to professionally managed financial assets. |
