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Investor Categories · Part 9 of 9
Who got the shares you didn't? Neha bids for an IPO, loses the retail lottery, and moves on. What she doesn't see is that her ₹10,000 monthly SIP fund may have been allotted a large block of the same IPO a day before the issue even opened. Mutual funds are now the biggest domestic buyers in the IPO market, and they get there by a different door from the one Neha used. This guide shows the doors, the numbers, and what it means for a retail investor who has to choose between bidding directly and holding a fund.
Practical Tips
The Routes Funds Use
| Route | Rule for mutual funds | What it means |
|---|---|---|
| Anchor book | 33% reserved; plus 7% for insurers and pension funds, 40% in total since 30 November 2025 | Early allotment at a fixed price, with a lock-in |
| Non-anchor QIB portion | 5% reserved; funds can also bid in the remaining QIB pool | Bids on the same terms as other QIBs, no lock-in |
| After listing | No reservation | Buying on the exchange like any investor |
If the 7% reserved for insurers and pension funds goes unsubscribed, SEBI's October 2025 amendment sends the balance to mutual funds. SEBI also raised the number of anchors allowed in large issues, to 15 per ₹250 crore of anchor portion, with a minimum allotment of ₹5 crore each.
How Big the Money Has Become
| Period | Mutual fund anchor investment |
|---|---|
| Calendar 2023 | ₹6,651 crore across 29 IPOs |
| Calendar 2024 | ₹21,583 crore across 34 IPOs |
| Four quarters to September 2025 | ₹21,976 crore (insurers: ₹5,216 crore) |
| 2026, to 31 August | ₹12,944 crore across mainboard IPOs |
Concentration is high. ICICI Prudential, SBI and Nippon India together account for over 52% of 2026's total, with SBI investing ₹2,294 crore across only six companies and Nippon ₹2,026 crore across ten. A handful of fund houses decide a large part of what the anchor book looks like.
A fund can win the allotment you lost, but its gain reaches you as a rounding error.
Practical Tips
Neha's Choice: Bid Directly or Hold the Fund
| Direct IPO application | Fund that holds IPO shares | |
|---|---|---|
| How you get in | Bid up to ₹2 lakh in the retail category | Buy units, any amount, SIP or lump sum |
| Allotment | Lottery when oversubscribed | No lottery, you own the fund |
| Exposure to one IPO | 100% of what you are allotted | A small slice of a diversified portfolio |
| Effect of a listing pop | Full gain, full loss | Small, spread across the portfolio |
| Effort | Research each issue yourself | Fund manager decides |
Neha gets two things from her SIP that she cannot get from the lottery: no luck involved, and no single-stock risk. She also gets almost none of the upside.
Practical Tips
What Has Changed and What Is Only Proposed
| Change | Status |
|---|---|
| Anchor reservation raised from 33% to 40% (33% mutual funds, 7% insurers and pension funds) | Notified 31 October 2025, effective 30 November 2025 |
| More anchors allowed in large IPOs (15 per ₹250 crore) | Notified, same date |
| Retail quota cut from 35% to 25% in large issues | Proposed in July 2025 consultation |
| Mutual fund share of the non-anchor QIB portion raised from 5% to 15% | Proposed in July 2025 consultation |
I could not confirm that the last two proposals have been adopted, so treat them as proposals until an RHP says otherwise. The direction is clear: SEBI expects retail money to reach large IPOs increasingly through mutual funds.
Practical Tips
What Neha Does Next
Neha keeps her SIP, because it is the part that does not depend on luck. She bids directly only on IPOs she has researched. The one new habit she adds is checking the anchor list, published the day before the issue opens, to see which fund houses took part and how much of the anchor book they filled. It does not tell her whether to bid, but it does tell her who has already read the prospectus closely and decided to commit money.
KEY TAKEAWAYS
Mutual funds enter IPOs through the anchor book, where 33% is reserved for them, and through the non-anchor QIB portion, where 5% is reserved. Since 30 November 2025 the anchor reservation for domestic institutions is 40%, with insurers and pension funds taking 7%. Mutual funds invested ₹21,583 crore in IPO anchors in 2024 and ₹12,944 crore in 2026 up to 31 August, concentrated in three fund houses. A fund holding IPO shares is a diversified bet, so a listing pop moves its value only slightly. Check the anchor list before you bid, and treat fund interest as vetting rather than assurance.