With 30% CAGR, MFs Size Likely To Be Rs.9.50 Lakh Crore By 2010

The Chamber Paper has pointed out MFs are relatively safe investment options for retail participants. MFs adopt professional and prudent fund management techniques and measures to ensure that the probability of investors getting returns that are greater than the underlying benchmarks is high. They also minimise risks for investors.

The emerging trends in the MF would be that the Commodity funds will invest in commodities such as metals, food grains, and crude oil, commodity companies, or commodity futures contracts. Likewise, Real estate funds will invest in real estate directly. As the competition in the Indian MF industry will further intensify and go forward. Fund managers will, therefore, need to deliver products that are relevant to investors. As the Indian markets and investors mature, financial advice, product diversification, and multi-distribution channels will become critical for long-term success.

Increasing investor awareness will help propel growth for the Indian MF industry. Investors need to be however warned against the common fallacy of comparing returns of debt-oriented fixed-income MFs and fixed-income products of small savings schemes without considering the attendant risks.

In developed countries such as the US, half the households own mutual funds. In India, however, MF penetration in households remains low. In all other respects, including regulation and disclosure standards, Indian MFs compare well with their counterparts in the developed nations. The Indian industry is fast catching up with the advanced markets in terms of product offerings, too. MFs in India are also focused on enhancing their reach to cities other than the metros.
(This is press release of Assocham)

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