SBI Funds Management’s leadership in the mutual fund industry is well-established, but two recent preliminary reports from Emkay Global and Equirus suggest that investors should look beyond its core business. According to both companies, the expanding presence of asset manager in portfolio management services (PMS), alternative investment funds (AIFs) and specialty investment funds (SIFs) could emerge as an important earnings driver as the wealth management industry in India evolves.
While mutual funds remain the core business of SBI funds, both reports argue that the company’s alternative asset platform provides an additional avenue for growth, helping to diversify revenues and improve profitability in the long term.
Alternative assets are emerging as the next growth pillar
Emkay points out that the asset management industry in India is witnessing a gradual shift towards higher-yielding products, especially equity-oriented offerings and alternative investments such as asset management systems (PMS) and mutual funds (AIFs). As wealthy investors increasingly seek customized investment strategies beyond traditional mutual funds, these companies are expected to support better revenue returns and enhance the company’s earnings profile.
Equirus highlights the leadership of SBI funds in these companies, calling it an important differentiator. The brokerage notes that the company operates the largest AMS platform in India, with a market share of 39.7% and INR 16.9 trillion of AMS and advisory services. It also identifies SBI Funds as one of the largest Specialized Investment Fund (SIF) platforms in the country, commanding a market share of 28.2%.
PMS, AIFs and SIFs expand the revenue base
Alternative investment funds are another rapidly growing sector. According to Equirus, the AIF assets under management of SBI funds expanded at a compound annual growth rate (CAGR) of around 29% between FY24 and FY26. During the same period, revenues from the non-mutual fund business grew at a CAGR of around 24%, underscoring the growing contribution of these businesses to the overall financial performance of the company.
Unlike mutual funds, which primarily meet the needs of individual investors with standardized investment products, portfolio management services and venture funds typically serve high-net-worth individuals (HNIs), family offices, and institutional investors seeking customized portfolio management and alternative investment opportunities. This enables SBI funds to participate across multiple sectors of the asset and wealth management industry rather than relying solely on retail mutual fund flows.
High profit margin companies can support profitability
Reports also indicate that this diversified business mix could help protect the company from pricing pressures in the traditional mutual fund business. As competition among asset managers intensifies and fee pressure remains an industry-wide challenge, high-margin businesses such as PMS, AIFs and SIFs can support revenue growth and profitability.
Emkay expects a continued shift in the company’s asset mix toward equities and alternative investments to help maintain healthy revenue yields while leveraging operating leverage as assets grow.
Meanwhile, Equirus expects the combination of expansion of mutual funds and fast-growing non-mutual fund companies to drive a revenue CAGR of approximately 14% and an EBITDA CAGR of approximately 15% between FY26 and FY29. It also expects the company’s asset-light business model to maintain strong profitability and returns over the medium term.
Diverse growth story
Together, the two reports indicate that while SBI Funds’ mainstream mutual fund franchise remains the core of its business, its growing footprint in PMS, AIFs and SIFs provides additional long-term growth leverage. For investors evaluating a company’s prospects, the alternative asset business could become an increasingly important contributor to earnings diversification, margin flexibility and long-term sustainable growth alongside its market-leading mutual fund operations.
