Here is a question worth sitting with. When you picked your last mutual fund, did you actually understand what you were buying, or did you simply trust the name on the label?
A new study by Eminence Strategy Consulting suggests most Indian investors are doing the latter. And the implications go well beyond individual portfolios. They point to something the mutual fund industry has not fully reckoned with: growth has outpaced comprehension, and reputation has quietly become the crutch filling that gap.
The Numbers Nobody Talks About
India’s mutual fund industry now manages over ₹81.6 lakh crore across 27.6 crore folios, a sixfold jump from ₹13.8 lakh crore just a decade ago. SIP contributions touched ₹30,594 crore in May alone. On paper, this looks like a financial literacy success story.
It is not quiet.
Dig into the survey of 1,100+ investors, and a different picture emerges. One in three investors admit they trust a fund company’s reputation more than they trust their own understanding of what they are investing in. Nearly one in four first-year investors rate their own product understanding at 4 or below, on a ten-point scale. And 28% of investors, people who are already putting money into mutual funds, cannot name a single source that taught them how any of this works.
Read that again. More than a quarter of active investors learned nothing from anyone, and yet they invested anyway.
Performance Gets You In. It Doesn’t Keep You There
The report’s most important line is also its simplest: performance is the price of entry, reputation is what determines whether you stay, grow your portfolio, or leave during periods of uncertainty.
Seventy one percent of investors say fund performance is what first draws them to a scheme. Fair enough, that is expected. But here is the twist. Even when returns are strong, 36% of investors say they would still exit a fund if credible negative news kept surfacing. Good numbers on your statement will not save you from a governance scandal, a leadership exit, or a viral social media pile-on, if the investor’s confidence was never really theirs to begin with.
And whose confidence is it, then? Increasingly, it belongs to the fund house. Investors are leaning on brand familiarity, fund manager visibility, advisor reassurance, and social media chatter to do the thinking they have not done themselves. That works fine when markets are calm. It becomes a liability the moment something goes wrong.
The Investors Most Likely to Bolt
Some investor groups are far more prone to switching under pressure than others, and the pattern is not random.
First-year investors top the list at 49%. Gen Z follows at 46%. Investors from Tier 3 and smaller towns sit at 47%. Those who lean heavily on social media for cues come in at 44%. What connects all four groups? Low confidence in their own understanding, paired with heavy dependence on someone or something else to vouch for the decision.
Contrast that with investors who have been in the game for ten years or more. Their trust in the category climbs to 8.5 out of 10, compared to 7.46 for newcomers. Their loyalty is no longer borrowed from a brand name. It is earned through experience, tested through market cycles, and anchored in an actual understanding of what they own. That is the difference between conviction and comfort.
Women Investors Tell an Interesting, Underreported Story
Here is a genuinely fascinating wrinkle. Women investors report lower confidence in their product understanding than men, 46% versus 59%. They also lean more heavily on brand reputation, at 40% versus 28% for men.
And yet, when negative news hits, women do not switch funds more often than men. The numbers are nearly identical, 35% versus 36%.
Something is compensating for that confidence gap, and the report points toward stronger reliance on advisors, peers, and clearer communication. In other words, when the explanation is good enough, the trust holds, even without deep product mastery. That is a lesson every advisor and every AMC communication team should be writing on a wall somewhere.
Why People Stay Out Entirely
It would be easy to assume non-investors are simply broke or scared of the stock market. The data says otherwise. The single largest reason people avoid mutual funds altogether is not lack of money. It is lack of knowledge, cited by 29% of non-investors, ahead of trust concerns at 20% and perceived affordability at 15%.
Many genuinely believe you need a large sum to make investing worthwhile. As one respondent put it, thoda paisa invest nahi hota. Never mind that SIPs start at ₹100. The awareness simply has not reached them.
What This Means, Practically
If you are an investor reading this, the takeaway is uncomfortable but useful. Ask yourself honestly whether you understand what you hold, or whether you are simply comfortable with the name attached to it. Comfort is not the same as conviction, and only conviction survives a bad news cycle intact.
If you are on the advisory or fund house side, the lesson is sharper still. Fund manager credibility, plain language communication, and structured onboarding are not soft, feel-good initiatives. They are retention infrastructure. The report notes that fund manager credibility actually grows in importance the longer an investor stays invested, unlike brand familiarity, which fades. That alone should tell you where the real long-term trust is built, and it is not on a billboard.
The Indian mutual fund industry has done a remarkable job scaling access. What it has not yet done is scale understanding at the same pace. Until it does, reputation will keep doing a job that education should be doing instead, and that is a fragile place for an industry managing ₹81 lakh crore of other people’s money to be standing.
