The Mutual Funds in India has grown robustly over the years since the entry of private players in the market. Previously the investors had few choices as the number of investment management companies were less. Even then people invested their money in these schemes as it offered them a diversified investment option. By investing in these funds they were able to diversify their investment in a portfolio that included common stocks, preferred stocks, bonds and other financial securities. While the investors enjoyed the advantage of liquidity they also got the scope to easily access their invested funds on requirement.
In today’s scenario the Scope of Mutual Funds has become so wide, that people sometimes take long time to decide the type of mutual fund, they would invest. Over the years several Investment Management companies have emerged who offer various types of Mutual Funds, each carrying a unique characteristic and different beneficial feature.
The savings rate in India has risen to 32.4% in 2006-07 with the GDP growth at 9.2% in the same time. Further the exemptions in Income tax has lead the individual investors to invest a part of their savings in mutual fund. The entry of foreign based asset management companies has also helped in the rise of demand for various schemes, ultimately expanding the market in India.
The industry in itself has been going through various consolidations taking place in the form of merger and acquisition thus witnessing its growth. Apart from the Unit Trust of India, no other mutual fund has significant mass investor base as most of the funds are dependent upon the institutional business and high net worth individuals to expand their corpus. Thus the deals by public sector funds in the past were mainly for the acquisition of retail assets.
Most of the growth in mutual fund is a result of participation of the institutions and urban households. The rural area still lies untapped for the purpose. Further the introduction of commodity mutual funds would also accelerate the growth of the industry in the coming years. Also given the unprecedented growth of the economy, surely there would be lot of scope for the mutual funds in India.
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