Debt investing has always been part of the real estate opportunity set, but it is growing in popularity. It allows investors to limit risk exposure compared to equity

Why, suddenly, is there so much marketing about mutual funds in India? Is something happening in the background? Does the government have certain objectives that we aren’t aware of?

You have raised a very valid question but I urge you not to look at it with suspicious eye. Lets understand one by one.

What is Mutual Fund ?

The term “mutual” signifies a mechanism wherein the benefits of investment accrue equally to all the investors in proportion to their investment. A mutual Fund a financial institution through which the pooled surplus funds of investors are invested in a well-diversified portfolio of securities (Equity and debt) thus spreading and reducing the risk and ensuring a good return to the investors.

Why Mutual Funds ?

Indian economy is at a very important juncture poised for a multi-year growth phase, with the governments focus on reforms. Investment opportunities will also emerge with formalization of the economy leading to shifting of market share from unorganized to the organised sector in highly fragmented consumer segments bringing nations progress closer to every household.

People want to make money and they have understood the fact that only way to beat the inflation is an investment in equity. They are moving away from traditional investment products like gold and real estate and focusing on mutual funds.

Recent trend in Indian Mutual Fund Industry

The AUM (total funds contributed by investors) of the Indian MF Industry has grown from ₹ 5.41 trillion as on 31st July 2008 to ₹23.06 trillion as on 31st July, 2018, more than four fold increase in a span of 10 years!! Now thats a spectacular growth. Also note this investors are small investors like you and me who accounts for more than 97% of the overall 5 crore plus investor accounts.

Is the growth over in Indian MF industry ??

Not yet. As per industry estimates, Indian mutual fund industry’s assets under management (AUM) are expected to touch Rs 100 trillion in the next 10 years on account of strong participation from retail investors. In India, asset base of mutual funds as a percentage of GDP is just 11 per cent, while the world average is 62 per cent. Now thats an enormous gap to be fulfilled yet.

India has a very saving culture as Indians save ₹ 20-30 lakh crore every year, which indicates immense scope for channelizing this saving into MF industry