SEBI Chairman Tuhin Kanta Pandey has asked asset managers to focus on tangible investor returns rather than just increasing assets under management. While the industry has grown to Rs 86 lakh crore, the regulator emphasized that true success depends on the value delivered to the 6 crore unique investors. This comes as the industry faces a recent moderation in equity inflows and increasing scrutiny over digital and AI-driven operations.
SEBI Chairman Tuhin Kanta Pandey has called on the mutual fund industry to shift its primary focus from simply collecting assets to delivering tangible returns for investors. Addressing the Association of Mutual Funds in India (AMFI) at its foundation day, the regulator emphasized that while the industry has reached a massive scale of Rs 86 lakh crore in assets under management (AUM), true success must be measured by the value created for the 6 crore unique investors, rather than just the growth of the corpus.
This push for an investor-centric approach comes at a time when the industry is dealing with shifting market dynamics. While the mutual fund sector has seen long-term expansion, recent data for July 2026 showed a 42% year-on-year decline in equity mutual fund inflows. This moderation in investment flows highlights the need for fund houses to improve investor outcomes and transparency, as retail confidence remains sensitive to market volatility and performance. The regulator is signaling that growth in AUM should not come at the cost of sound investment decisions or proper risk communication.
The SEBI Chairman also stressed that as the industry moves toward a more digital and automated future, asset management companies must take greater responsibility for their fiduciary duties. This includes rigorous due diligence, protecting investor data, and ensuring that the use of new technologies like artificial intelligence does not compromise ethical standards. SEBI is currently working on comprehensive frameworks to govern the use of AI and machine learning in capital markets, which will likely demand stricter human oversight and mandatory emergency safeguards from financial institutions.
With a stated goal of expanding the unique investor base to 12 crore, the regulator indicated that the industry needs to strengthen its distribution networks and focus on investor education. SEBI is also reviewing the regulatory framework for mutual fund distributors and exploring new norms for portfolio management services. For investors, the important monitorable remains how these evolving regulatory expectations for governance and transparency will impact the cost structures, service models, and, ultimately, the performance of asset management companies in the coming quarters.