6 New Fund Houses to join the MF industry in 2025

In the past few months, the Securities and Exchange Board of India (SEBI) has issued several partial and final approvals for the new mutual fund players (applicants). It is expected that at least six new companies will enter the growing mutual fund industry in India this year. Let us look at the details.

What is a fund house?

A mutual fund house (also called an asset management company or AMC) is a company that manages mutual funds. AMCs pool money from multiple investors and invest it in a diversified portfolio of securities like stocks, bonds, and other assets. Examples of Fund Houses in India:

• SBI Mutual Fund  
• HDFC Mutual Fund  
• ICICI Prudential Mutual Fund  
• Axis Mutual Fund  
• Nippon Life India Mutual Fund

New Fund Houses

As per the information available, at least six applicants either hold a license or have in-principle approval. Let us look at these details:

In-principle approvals: Jio BlackRock, Capitalmind, Choice International, and Cosmea Financial Holdings have received in-principle approvals.

This is the first stage of approval. It is a conditional approval granted by SEBI after reviewing the applicant's initial application and assessing their basic eligibility. Once this approval is received, the applicant is allowed to set up the mutual fund business - they can set up the infrastructure and hire the core team.

Final License: Angel One and Unifi Capital have the final license. After the in-principle approval, SEBI inspects the progress of the companies after six months. The final license is issued if the applicant meets all the criteria.

If the companies with in-principle approval go on to receive the final license, 2025 will be a landmark year with a record six fund houses entering the competitive entry. The previous record was set in 2023 when five new names entered the MF industry, but three of them entered through acquisitions.

Key Details About New Fund Houses

Several players with in-principle approval for mutual fund licenses are already making significant progress in their six-month preparation phase. Among them, Jio BlackRock Asset Management Company (AMC) has been one of the most anticipated entrants. The fund house recently appointed George Heber Joseph as its Chief Investment Officer (CIO), fulfilling one of the key requirements for obtaining an MF license — hiring an experienced CIO.

While new entrants like Jio BlackRock plan to cater to all segments of the mutual fund business — including active, passive, and smart-beta strategies — and offer products across equity, debt, and hybrid categories, others are adopting a more focused approach.

For instance, Angel One MF plans to exclusively offer passive funds (funds that replicate the performance of a specific market index (e.g., Nifty 50 or Sensex) by investing in the same stocks in the same proportion as the index.).

Meanwhile, two players awaiting final approval, Capitalmind and Cosmea Financial Holdings, have announced plans to concentrate on factor-based and quantitative investing strategies.

Factor-based strategy involves targeting specific factors or characteristics (e.g., value, growth, momentum, quality, or low volatility) that are believed to drive returns. Quantitative Investing approach uses data-driven models, algorithms, and mathematical analysis to identify investment opportunities. It minimizes human biases and focuses on patterns or inefficiencies in the market to make systematic investment decisions.

How will more fund houses help the Indian financial landscape?

The entry of more mutual fund houses in India can significantly enhance the investing landscape and provide numerous advantages for investors, the market, and the economy. Let us look at some benefits:

• Increased Competition: Lower Costs: More players means more competition, which can lead to lower expense ratios and fund management fees, making mutual fund investments more affordable.
• Improved Accessibility: More players mean greater marketing and educational efforts, helping to increase awareness about mutual funds among retail investors in underserved areas.
• Specialized Investing: New players often target niche strategies, as we mentioned earlier, such as passive funds, factor-based investing, or sector-specific funds, giving investors access to advanced and diverse approaches.
• Channelling Savings: More mutual funds encourage households to move from traditional savings instruments like fixed deposits into equity and debt markets, increasing long-term capital availability for businesses.

Before you go

We will keep you posted on the 6 AMCs and their approval status. Overall, it is positive news as the entry of more mutual fund houses enriches the Indian investing landscape as it leads to innovation, reducing costs, and increasing accessibility. It empowers investors with a broader range of choices and contributes to the development of a robust financial ecosystem in the country.