The Indian mutual fund industry has grown at a breathtaking pace in the last five years. Not only have its assets under management (AUM) grown from Rs 3 lakh crore in September 2006 to Rs 7 lakh crore in September 2011, more than 1,150 schemes are on offer today compared to 600 in 2006. Assets have increased by nearly 60 per cent over the past one year. Further, investors have got access to new products such as exchange-traded funds (ETFs), fund of funds and international funds.
India’s buoyant asset management industry, set to continue expanding at a breathtaking pace, is attracting several new players, both international and domestic. Over a score of funds are awaiting approval, and about a dozen are expected to start operations over the next one year. So far, the Indian mutual fund industry has been product-led and offers many products that are not relevant to investors' needs. Investors will start demanding more solution-based products. Products that cater to specific life-stage needs such as education, marriage and housing may become popular. Child plans, for instance, can invest more in equity as investors can afford to take more risk given the long time frame to achieve the goal. Over the next five years, we could also see mutual funds take over the management of pension funds. We are also likely to see the launch of many new AMCs.
Mutual funds play a significant role in addressing these requirements. Mutual fund, in its essential detail, is a pass-through vehicle through which a person can invest in professionally managed portfolios of disparate asset classes like domestic equities, gilt, corporate bonds, money market instruments, gold, overseas equities, etc. The potential for growth for the Indian mutual fund industry is indeed enormous. There’s a huge generational shift in investment habits and patterns, especially among the young. Not content with plain old vanilla bank deposits, a growing number of Indians are seeking out more exciting and lucrative products. And fund houses are whetting their appetite through attractive schemes.
Source: Multiple
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