Mutual Fund Investment

Overall Rating: star ratingstar ratingstar ratingstar ratingstar rating[0/5]Total Votes [  ]  
Rate this page:
Potential of Indian Mutual Funds Industry

The Indian mutual funds industry has been experiencing a rapid growth due to infrastructural development, personal financial assets getting augmented and increased foreign participation. The risk appetite of the middle class investors has been increasing, income has been going up, investors being made aware of the potential of the mutual fund industry – all these have been making India a preferred Mutual Fund investment destination when compared to other investment vehicles like Fixed Deposits (FDs) and postal savings. The diversified portfolio is another reason for the investors to get allured by the Mutual Fund Investment India.

Growth of Indian MF Industry

  1. The Indian mutual funds retail market, which at present is growing at a CAGR of around 30%, is estimated to reach US$ 300 Billion by 2015.

  2. Income and growth MF schemes made up for the bulk Assets under Management (AUM) in India.

  3. Private sector Asset Management Companies (AMCs) account for majority of mutual fund sales in India (around 84% on March 31, 2008).

The growth path of Mutual Fund Investment India is attributed to the high saving pattern in India. This is a healthy status of the MF industry in India when compared to Japan, France and China. The Mutual fund sector in India though has huge potential, yet the limited participation of the rural sector will always act as a deterrent factor. The other hurdles in this regard are lack of awareness, inferior distribution channel and limited banking services in the rural regions. The best instrument of investing money nowadays is the mutual fund. Investing in a stock market has become risky these days due to the high volatility in the market.

Phases of Indian Mutual Funds investment

The foundation of the mutual funds industry in India dates back to the time when mutual fund was introduced by UTI in 1963. The growth path has been staggering but it saw a surge from 1987 when there other players also entered the market. Mutual Fund Investment India have witnessed an outstanding development both quality and quantity wise. Thus it is recommended to follow up with the potential of the mutual fund investment India for a better growth prospect.

4 phases in the Indian Mutual Funds investment India
  • First Phase - 1964-87
  • Second Phase - 1987-1993 (Entry of Public Sector Funds)
  • Third Phase - 1993-2003 (Entry of Private Sector Funds)
  • Fourth Phase - since February 2003

Types of Mutual fund investment in India

  1. Closed-end funds: A closed-end mutual fund bears a number of shares which are issued to the public by an initial public offering (IPO).

  2. Open-end funds: Open end funds are managed by mutual fund houses for raising money from shareholders and they invest in a group of assets.

  3. Large cap funds: Large cap funds are those mutual funds, which look for capital appreciation by way of investing in blue chip stocks.

  4. Mid-cap funds: Mid cap funds invest in small/medium sized companies, but with no proper definition of classifying a company.

  5. Equity funds: Equity mutual funds, also known as stock mutual funds invest pooled amounts of money in public company stocks.

  6. Balanced funds: Balanced funds are also known as hybrid fund, buying a combination of common stock, preferred stock, bonds, and short-term bonds.

  7. Growth funds: Growth funds are mutual funds that target at capital appreciation by investing in growth stocks.

  8. Exchange traded funds: Exchange Traded Funds (ETFs) are a basket of securities being traded on an exchange, just similar to that of a stock. They are not like the conventional mutual funds.

  9. Sector funds: These funds are funds that restrict the investments to a specific segment or sector.

  10. Index funds: An index fund aims to replicate the actions of an index of a specific financial market.

List of top Indian mutual funds

  • Baroda Pioneer Mutual Fund
  • Benchmark
  • Birla Sunlife
  • Canbank
  • DBS Chola
  • Deutsche
  • DSP Merrill Lynch
  • Escorts
  • Fidelity
  • Franklin Templeton
  • HDFC
  • HSBC
  • ING Vysya
  • JM
  • Kotak Mahindra
  • LIC
  • Morgan Stanley
  • Principal
  • Prudential ICICI
  • Reliance
  • Sahara
  • SBI
  • Standard Chartered
  • Sundaram BNP Paribas
  • Tata
  • UTI

>> More Investment in India