State Street eyes stake in Indian mutual fund to expand presence in $900 billion market

Global investment giant State Street Investment Management is in advanced talks to acquire a stake in an Indian mutual fund, marking its latest push to gain a foothold in the country’s rapidly growing $900 billion asset management industry, Bloomberg News reported on Tuesday.

The move would give the world’s fourth-largest asset manager, with $5 trillion in assets under management, direct access to India’s booming retail investor base — a market where foreign players have often faced challenges in distribution and regulatory navigation.

As part of the proposed partnership, State Street plans to share its proprietary technology with the Indian asset manager to develop quantitative and data-driven investment strategies, the report stated.

Additionally, State Street intends to offer global model portfolios comprising foreign equities and exchange-traded funds (ETFs) via Smallcase, a local investment platform in which the firm already holds a stake. The portfolios will be designed to help Indian investors access global diversification through a seamless, digitally enabled interface.

A spokesperson for State Street declined to comment on the development.

India’s booming retail investment

A local partnership would allow State Street to leverage India’s rapidly expanding mutual fund ecosystem, where retail participation has surged through systematic investment plans (SIPs) and rising financial literacy.

India’s equity market capitalisation has more than doubled to $5.3 trillion over the past five years, making it the fourth-largest equity market globally. Domestic mutual funds have seen continuous inflows for more than 50 months, led by regular monthly SIP contributions from individual investors.

This growth has caught the attention of global asset managers. BlackRock, Amundi, and Schroders have already established partnerships with Indian financial firms to gain access to the country’s robust distribution networks and deepening retail base.

Foreign peers set the trend

The move by State Street mirrors the strategy of BlackRock Inc., which recently re-entered India through a joint venture with Jio Financial Services Ltd. The partnership aims to build a low-cost digital mutual fund business targeting India’s emerging middle class. BlackRock expects India’s mutual fund industry to triple in size within seven years, driven by rising disposable incomes and financial inclusion.

Similarly, Amundi SA and Schroders Plc have invested in local partnerships to tap the long-term potential of India’s savings and investment economy. Meanwhile, Jefferies Financial Group Inc. is also preparing to enter India’s asset management landscape.

Strategic opportunity

For State Street, a partnership with an Indian fund house would be a strategic gateway to local investors and a distribution advantage in a market that is traditionally challenging for global firms to penetrate independently. The firm’s expertise in quantitative models, index strategies, and ETF management could complement the domestic partner’s on-ground presence and retail reach.