While SBI Funds Management remains a dominant force in India's mutual fund industry, a new perspective from brokerages Emkay Global and Equirus highlights a significant shift: the company's alternative asset business is emerging as a crucial long-term growth engine.
Beyond Traditional Mutual Funds
Recent reports suggest investors should look beyond SBI Funds' flagship mutual fund operations. Its expanding presence in portfolio management services (PMS), alternative investment funds (AIFs), and specialized investment funds (SIFs) is poised to become an important earnings driver as India's wealth management sector evolves.
These alternative asset platforms provide an additional avenue for growth, helping to diversify revenues and improve profitability over the long term. India's asset management industry is witnessing a gradual shift towards higher-yielding products, particularly equity-oriented offerings and alternative investments.
Leading the Alternative Asset Space
SBI Funds already operates India's largest PMS platform, holding a 39.7% market share with ₹16.9 trillion in PMS and advisory assets. It is also a leader in Specialized Investment Funds (SIFs), commanding a 28.2% market share.
Alternative Investment Funds (AIFs) represent another fast-growing segment. SBI Funds' AIF assets under management expanded at a compound annual growth rate (CAGR) of approximately 29% between FY24 and FY26. Over the same period, revenue from non-mutual fund businesses grew at around 24% CAGR, underscoring their increasing contribution.
Higher Margins and Diversified Revenue
Unlike mutual funds, which primarily serve retail investors with standardized products, PMS and AIFs typically cater to high-net-worth individuals (HNIs), family offices, and institutional investors seeking customized portfolio management and unique investment opportunities. This allows SBI Funds to engage across multiple segments of the asset and wealth management industry, reducing reliance solely on retail mutual fund inflows.
This diversified business mix is expected to help cushion the company from pricing pressures in the traditional mutual fund business. As competition intensifies, higher-margin businesses like PMS, AIFs, and SIFs can support robust revenue growth and profitability. Emkay anticipates that the shift towards equity and alternative investments will help maintain healthy revenue yields, benefiting from operating leverage as assets expand. Equirus projects a revenue CAGR of about 14% and an EBITDA CAGR of nearly 15% between FY26 and FY29, driven by this combination of mutual fund expansion and faster-growing non-mutual fund businesses.
A Comprehensive Growth Story
In conclusion, while SBI Funds' dominant mutual fund franchise remains foundational, its expanding footprint in PMS, AIFs, and SIFs offers a critical additional long-term growth lever. For investors, the alternative asset business is becoming an increasingly important contributor to earnings diversification, margin resilience, and sustainable long-term growth, complementing its market-leading mutual fund operations.