EXECUTIVE SUMMARY:
The Indian Mutual Fund Industry in recent years has exponential growth and yet it is still at a very nascent stage. We believe that the mutual fund industry has grown in terms of size or choice available, but is a long distance from being regarded as a mature one. To understand this one has to look at the global mutual fund industry, one has seen that the assets have grown by 185% between 2000 and 2006. In comparison, the Indian assets outgrew at a staggering 446%, whereas the US only grew by 158% and Europe by 242%.
As our economy continues to grow at a spectacular rate there is a huge amount of wealth creating opportunities surfacing everywhere. Financial Planners have an immensely responsible role to play by identifying these opportunities and channeling them into wealth creating initiatives that would enable people to address their financial needs. To give an overview of a recent study conducted by Invest India, there are about 321.8 million paid workers in India. Out of them only 5.3 million have an exposure to mutual funds. This is less than 2% of the total work force. Even more interesting fact is that 77% of them reside in super metros and Tier I cities. Again, about 4 million come in the Rs.90,000-5,00,000 income bracket. The penetration among the less than Rs.90,000 and more than 5,00,000 income bracket is very low. The need for the hour is to expend the market boundaries and expand scope in Tier II and Tier III cities.
Indian is also one of the fastest growing markets for mutual funds, attracting a host of global players. Hence, investors will have an even wide range of products to choose from. The combination of the increase in number of fund houses along with new schemes and the increase in the number of people parking their savings in mutual funds have resulted in percent in recent times.
As of now, Indian assets stood at 137 billion dollars and are growing. We already have many experts expressing their concentration at the frequency of NFO launches. Yet we have less than 1000 schemes in India, compares to 15000 in the US and 36000 in Europe. The gap is significant and has to be filled up with unique and better priced products.
There has been a rapid rise in the HNI segment. India stands only second best to Korea in the Asia-Pacific region in terms of percentage growth. The total HNWI (high net worth individual) assets stood at about Rs.12 trillion and their assets are distributed over various assets classes. To top them Mutual funds have to come up with structured products, real estate funds, art funds etc.
Indian households have to be increased their exposure to the capital market. Very interestingly, the MF proportion in this has increased. In fact, there has been more than 2000% growth in the assets coming to Mutual Funds in the past years.
Statistics reveal that the higher the portion of investor’s savings is now invested in market-linked avenues like mutual funds as compared to the earlier times.
INTRODUCTION

There is lot of investment options available today in the financial market for an investor with an investable surplus. An individual can invest in Bank Deposits, Corporate Debentures and Bonds where there is a low risk but also low returns. Individual may invest in stock of companies where the risk is high and the returns are also proportionally high. The recent trends in the stock market has shown that an average retail investor always lose with periodic bearish trends. People began opting for portfolio managers with expertise in stock markets who would invest on their behalf. Thus we had wealth management services provided many institutions. However they proved too costly for a small investor. These investors have found a good shelter with the mutual funds.
A mutual fund is a professionally- managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. “In a mutual fund, the fund , who is also known as the portfolio manager, trades the fund’s underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV) is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding.
To state in simple words, a mutual fund collects the savings from small investors, invest them in Government and other corporate securities and earn income through interest and dividends, besides capital gain. It works on the principle of “small drop of water makes a big ocean”.

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