On 19 March, SBI Funds Management Ltd, the company that runs SBI Mutual Fund, filed papers with the capital markets regulator to offer its shares to the public for the first time. If it follows through with that plan, as expected in the second half of 2026, all the top four mutual funds in India by assets under management (AUM) will be listed on the stock market. SBI Mutual Fund is the largest of the lot, a position it has achieved over the past decade. While it isn’t a standout in equity performance or maximizing revenues relative to assets managed, it has a lot going for it, starting with its parental connections.
Decade of growth
SBI Mutual Fund is India’s second-oldest fund house. It was set up in 1987, when the sector was closed to private players. Over the years, it has gone through several phases. Despite its parent being State Bank of India (SBI), India’s largest bank, it did not leverage that relationship effectively. When the sector was privatized in 1993, attention shifted to foreign fund houses like Franklin Templeton, HDFC MF and ICICI MF. In 2015, SBI Mutual Fund was ranked fourth by assets, but trailed HDFC and ICICI by 40-45% in AUMs.
That changed in the ensuing decade. During 2015-2020, its AUMs grew at twice the rate of ICICI and HDFC, and it leapfrogged them, along with Nippon, to secure the top spot. In the next five-year period, it matched their growth and held on to the top slot. In the October to December 2025 quarter, SBI’s average AUMs amounted to ₹12.5 trillion, against ₹10.8 trillion for ICICI and ₹9.2 trillion for HDFC.
Top of the pile
As of December 2015, five of the top 20 schemes by AUM were from SBI. In the top 10, SBI had three schemes, the joint-most, along with HDFC. Of the three schemes with AUMs of more than ₹1 trillion, two were from the SBI stable: SBI Nifty 50 ETF and SBI BSE Sensex ETF. In a sense, these two schemes, much as they are flagbearers of growth, also represent the challenge SBI is trying to overcome.
Both schemes are exchange-traded funds (ETFs) that mimic India’s two primary stock indices. Thus, their portfolio is pre-set. ETFs are a cost-efficient way of investing in leading share indices or an asset class. From a fund house’s perspective, while ETFs add to AUMs, they don’t add to revenues in the same way as actively-managed schemes do. In the latter, portfolio managers have the freedom to create a portfolio, a service for which the rules allow them to charge a higher fund management fee than an ETF.
Passive to active
The mutual funds business is straightforward. A mutual fund offers investors a bouquet of schemes across asset classes and investment themes. It charges a fee benchmarked to its AUMs. Thus, at a base level, the higher its AUMs in equity schemes, the higher the mutual fund’s revenues. At the next level, the mix between passive and active fund management influences revenues.
In the top 10 schemes, SBI Nifty 50 ETF and SBI BSE Sensex ETF are the only ETFs. All others are actively managed schemes, for which mutual funds can charge higher fund management fees. A look at the asset mix of the top three fund houses shows that SBI has a significantly greater share of AUMs in passives like ETFs than ICICI or HDFC. It is trying to change that. Between March 2023 and December 2025, the share of ETFs in SBI’s AUMs has dropped from 36% to 32%. That is still about twice that of ICICI and about four times that of HDFC.
Financial dropoff
As of February 2026, SBI BSE Sensex ETF had an expense ratio of a meagre 0.04%, according to the fund house’s website. By comparison, the expense ratio of the SBI Equity Hybrid Fund ranged from 0.7% to 1.4%, depending on the investment plan. Because of a high share of passives, SBI Mutual Fund is unable to carry its significant AUM advantage into its financials.
Thus, though ICICI Mutual Fund trailed SBI Mutual Fund by 14% in AUMs, ICICI reported higher revenues and profits in 2024-25. HDFC Mutual Fund showed a similar pattern. Its AUM was 26% below SBI's, but it nearly matched SBI's revenues and net profit.
Among the leading mutual fund houses, SBI has the lowest-to-income ratio because of a high presence of passives and its government lineage. In the long run, for higher market valuations, it would want to keep costs down but increase its revenues and margins via a higher share of actively managed AUMs.
Mixed showing
The prudent way of measuring performance in the mutual funds space is whether a scheme is beating its designated benchmark or not. Over the past five years in the equity funds space, among the 10 biggest fund houses, SBI Mutual Fund is somewhere in the middle. Of its 18 equity funds, 11 beat their respective benchmark, while seven did not. By comparison, all of ICICI’s and HDFC’s equity schemes beat their benchmarks. Even Nippon and Kotak had good strike rates.
SBI Mutual Fund has a lot going for it, not the least its lineage, which brings in distribution muscle. It also has plenty of room for cross-selling. Its prospectus shows that as of December 2025, its AUMs amounted to about 22% of the bank deposits of its parent bank. By comparison, that figure was 65% for ICICI, 32% for HDFC and 108% for Kotak. SBI Mutual Fund has a growth tailwind. Its AUM mix and performance will shape the kind of valuations the market gives it.
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