SEBI-registered alternatives rise to 16.9% of asset management

SEBI-registered alternatives accounted for 16.9% of Indian asset management in FY26, compared with 1.2% in FY14. Their growth slowed from an 84.7% compound annual growth rate, or CAGR, in FY14-FY19 to 29.5% in FY19-FY26, but remained above mutual funds at 17.5% and bank term deposits at 11.7%.

Why did SEBI-registered alternatives reach 16.9% of asset management?

Alternatives reached 16.9% because their measured size expanded faster than the overall asset-management base. Total asset management increased from Rs 10.7 trillion in FY14 to Rs 102.1 trillion in FY26, while Alternatives increased their share by 15.7 percentage points. The source defines asset management as mutual funds, portfolio management services, or PMS, excluding Employees' Provident Fund Organisation assets, and Alternatives.

The share did not increase in every year. Alternatives represented 1.2% in FY14, fell to 0.6% in FY15, then rose to 6.0% in FY19, 12.6% in FY20, 15.8% in FY24, 15.4% in FY25 and 16.9% in FY26. The FY25 decline shows that the longer-term expansion was not an uninterrupted annual gain.

The measure also has a specific construction. Alternatives comprise alternative investment fund, or AIF, commitments plus funds raised by real estate investment trusts, or REITs, and infrastructure investment trusts, or InvITs, in the respective years. This means the 16.9% comparison combines AIF commitments and REIT and InvIT fundraising with categories measured as assets under management, or AUM, rather than using one uniform invested-asset measure.

How did Alternatives grow relative to mutual funds and deposits?

Alternatives outgrew mutual funds, PMS and bank term deposits in both periods reported, although the growth rate moderated after FY19. From FY14 to FY19, Alternatives recorded an 84.7% CAGR, compared with 23.6% for mutual funds, 15.3% for PMS and 7.4% for bank term deposits. From FY19 to FY26, Alternatives grew at 29.5%, ahead of mutual funds at 17.5%, PMS at 12.9% and deposits at 11.7%.

The change from 84.7% to 29.5% reflects the low base from which Alternatives started in FY14. The source still records a 12.0-percentage-point growth advantage over mutual funds in FY19-FY26. Continued gains in the 16.9% share would require Alternatives to keep expanding faster than the aggregate asset-management denominator.

The wider savings comparison shows a shift in the relative weight of managed assets and deposits. Asset management grew at a 20.7% CAGR between FY14 and FY26, compared with 9.9% for term deposits. In the combined comparison, asset management’s share increased from 17% in FY14 to 39% in FY26, while term deposits’ share declined from 83% to 61%.

Which vehicles account for Alternatives’ growth?

AIFs account for the bulk of Alternatives, with REITs and InvITs forming smaller components. An AIF is a privately pooled investment vehicle established in India that collects funds from sophisticated Indian or foreign investors under a defined investment policy. AIF commitments reached Rs 16.9 trillion in FY26, more than 129 times the FY14 level, and about 41% of commitments had been drawn down.

Category II AIFs provide the largest concentration within AIF commitments. Category II’s share increased from 46.2% in FY14 to 75.2% in FY26, although it declined from 83.2% in FY23. Category I’s share fell from 48.1% to 6.2% over FY14-FY26, while Category III’s share increased from 5.6% to 18.6%.

Category II covers funds that do not fall under Categories I or III and generally cannot use leverage or borrowing except for permitted day-to-day operational requirements. Category I funds invest in areas such as start-ups, small and medium enterprises, social ventures and infrastructure. Category III funds can employ complex trading strategies and leverage, including through listed or unlisted derivatives.

REITs and InvITs add real-estate and infrastructure structures to the Alternatives total. Six listed REITs collectively managed assets of more than Rs 3.10 trillion in FY26, while cumulative REIT funds raised reached Rs 32,870 crore in FY26, from Rs 11,990 crore in FY21. As of March 2026, 28 SEBI-registered InvITs had raised more than Rs 1.97 trillion in equity since 2019 and managed about Rs 7.1 trillion of assets.

How significant are Alternatives within India’s financial system?

Alternatives equalled 5.0% of gross domestic product, or GDP, at current prices in FY26, up from 0.1% in FY14 and 1.5% in FY19. The FY26 GDP calculation uses a provisional estimate from the Ministry of Statistics and Programme Implementation. The increase from 0.1% to 5.0% represents a 42.7-times expansion from a low starting ratio.

Asset management overall rose from 9.5% of GDP in FY14 to 29.5% in FY26. Mutual funds increased from 7.3% to 21.3% of GDP, while PMS rose from 2.1% to 3.2%. Bank term deposits remained the largest category at 45.9% of GDP in FY26, compared with 45.7% in FY14 and 38.8% in FY19.

AIF access and liquidity differ from mutual funds. The source lists a Rs 1 crore minimum investment for AIFs, compared with a Rs 100 monthly minimum for a mutual-fund systematic investment plan. Mutual funds are public pooled vehicles that generally provide end-of-day net asset value, whereas AIFs are privately pooled vehicles that generally have lock-in periods or redemption restrictions.

Conclusion

Alternatives’ increase to a 16.9% share of Indian asset management in FY26 reflects faster growth than mutual funds, PMS and term deposits, led by AIF commitments. The result should be read with the source’s measurement definition: AIF commitments and REIT and InvIT funds raised are compared with AUM-based categories, so the share is not a single valuation of deployed assets.

The next indicators are the conversion of AIF commitments into drawdowns and investments, Category II’s share after falling from 83.2% in FY23 to 75.2% in FY26, and REIT and InvIT fundraising. The disclosed regulatory measures, including standardised private-placement memorandums, memorandum audits and AIF benchmarking amendments, may also affect future transparency and fundraising conditions.