Mutual Funds Are Dead. Here’s What Wealthy Indians Are Buying in 2024
- Samrat Investments
- Mar 19
- 4 min read
For decades, mutual funds have been the go-to investment vehicle for the average Indian investor. The mantra was simple: SIPs (Systematic Investment Plans) over the long term would generate steady, inflation-beating returns. Financial advisors championed the "mutual funds sahi hai" narrative, and millions bought into it.
But in 2025, the tides are shifting.
The wealthy in India—those who understand markets, access exclusive financial instruments, and have the privilege of time and information—are abandoning traditional mutual funds. Instead, they are deploying their capital into alternative, high-return assets that most retail investors either ignore or remain unaware of.
Here’s a deep dive into where the wealthiest Indians are investing in 2025 and why mutual funds, as we knew them, are becoming obsolete.
The Problem with Mutual Funds Today
1. Underperformance vs. New-Age Assets
Mutual funds, particularly equity mutual funds, have struggled to outperform new-age investment vehicles. With rising inflation, increasing volatility, and growing awareness of superior alternatives, mutual fund returns simply don’t justify their fees anymore.
Consider this: The NIFTY 50 has given an average return of 12-14% over the last decade. Meanwhile, alternative investments like private equity, high-growth startups, and new-age digital assets have delivered 30-50% returns in the same period. Why settle for average?
2. Higher Fees and Hidden Costs
Even as digital investment platforms have made direct equity investing easier, mutual fund houses continue to charge management fees, exit loads, and expense ratios that eat into investor profits. Wealthy Indians, who have access to personalized wealth management, are moving away from these cost-heavy instruments.
3. Liquidity and Control Issues
Mutual funds offer liquidity, but they come at a cost—market crashes, redemption pressures, and fund manager risks. In contrast, alternative assets provide wealthier investors with more control over their money, especially in volatile markets.
Where the Wealthy Are Investing Instead
1. Direct Investments in Startups and Private Equity
Gone are the days when startup investing was reserved for venture capitalists. Platforms like AngelList, LetsVenture, and Tyke are making it easier for high-net-worth individuals (HNIs) to invest directly in early-stage companies. With the rise of India's startup ecosystem, savvy investors are betting on disruptive companies rather than index funds.
Why?
Early-stage startups have delivered 10x, even 100x returns in some cases.
More control over investments, direct access to founders.
High potential upside compared to mutual funds.
2. Fractional Ownership in Real Estate
Ultra-rich Indians are diversifying their portfolios through fractional ownership of commercial real estate. Instead of buying one expensive property, they invest in high-value commercial spaces alongside others, earning rental income and capital appreciation.
Why?
Steady rental income beats volatile stock market returns.
Access to premium properties without full capital commitment.
High appreciation potential as real estate prices soar.
3. Global Stocks and Index Funds
Wealthy Indians are moving beyond Indian mutual funds to invest in the global markets. With apps like INDmoney and Vested, it’s easier than ever to buy US stocks, tech giants, and global ETFs, which have historically outperformed Indian markets.
Why?
Exposure to high-growth global companies (Tesla, Apple, Nvidia, etc.).
Portfolio diversification across geographies.
Hedging against INR depreciation.
4. Alternative Assets: Gold, Art, and Collectibles
Fine art, luxury watches, NFTs, and rare collectibles are becoming serious investment options for India’s elite. These alternative assets are not just wealth preservers; they often appreciate faster than traditional assets.
Why?
Art and collectibles provide inflation-hedged returns.
Growing digital platforms are making these assets accessible.
Gold continues to be a wealth protection tool amid global uncertainties.
5. Crypto and Blockchain-Based Investments
Despite regulatory uncertainties, crypto adoption among wealthy Indians is growing. Bitcoin, Ethereum, and blockchain projects offer asymmetric return opportunities that mutual funds cannot match.
Why?
Digital assets have outperformed traditional markets in the last decade.
Decentralized finance (DeFi) offers high-yield opportunities.
Increasing acceptance of crypto as an asset class.
What Should Retail Investors Do?
If you’re a retail investor who has relied solely on mutual funds, it's time to rethink your portfolio strategy. Here’s how you can adapt:
1. Start Small with Direct Equity Investing
Instead of blindly investing in mutual funds, start learning about direct stock investments. Use discount brokers like Zerodha and Groww to invest in fundamentally strong companies.
2. Explore Alternative Investments
Consider fractional real estate, startup investing (via platforms), or even small allocations to gold and collectibles.
3. Think Beyond India
Diversify with global ETFs and US stocks to reduce dependence on the Indian economy alone.
4. Allocate a Small Portion to Crypto
If you're risk-tolerant, explore Bitcoin, Ethereum, and DeFi opportunities cautiously. Even a 2-5% allocation can provide asymmetric returns.
Conclusion: Mutual Funds Are No Longer the Holy Grail
The investing landscape is evolving rapidly. While mutual funds still serve a purpose for some, they are no longer the best wealth-building tool in 2025. India's wealthy class has already pivoted towards more profitable, flexible, and high-growth alternatives.
If you want to build wealth like the rich, it’s time to stop blindly following outdated strategies and start exploring the new-age investment opportunities reshaping India's financial future.
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