The rise and rise of mutual funds
BANKING FINANCE|February 2024
It is curious that the cake cutting and champagne popping that accompanied the Nifty's new lifetime high in recent weeks, was not in evidence when the mutual fund industry topped Rs. 50 lakh crore in assets.
The rise and rise of mutual funds

Mutual funds have created more durable wealth for Indian retail investors and within a shorter time frame, than direct stock investments. Yet, the contribution of this vehicle to wealth creation and the change in household savings habits seems underappreciated.

Wealth Effect

Assets of the Indian mutual fund industry stood at Rs. 50.7 lakh crore in end December 2023, data from the Association of Mutual Funds of India shows.

About 59 per cent of this belonged to individual investors, taking their wealth parked with mutual funds to Rs. 30 lakh crore. This is neckandneck with the money held by individual investors in stocks, which Prime InfoBase pegs at about Rs. 30.4 lakh crore in September 30, 2023.

This is a significant milestone because mutual funds made their debut only in in the mideighties (not counting the erstwhile UTI) in India, while stock exchanges have been around since 1875.

In the 10 years from September 2013 to September 2023, the value of individuals' stock market holdings zoomed from Rs. 4.75lakh crore to Rs. 30.4lakh crore. But the value of their MF holdings has expanded faster from Rs. 3.8lakh crore to Rs. 30lakh crore.

This double engine growth in the two assets in the last 10 years is likely to have unleashed a substantial wealth effect for Indian households.

This could provide one explanation for affluent households in India splurging on premium goods and services and going on a borrowing binge, despite snailpaced income growth. Official RBI data on household savings in stocks and mutual funds at less than 1 per cent of GDP tends to underplay the wealth effect, because it captures only inflows into these assets at cost.

Lure of Market Returns

Esta historia es de la edición February 2024 de BANKING FINANCE.

Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.

Esta historia es de la edición February 2024 de BANKING FINANCE.

Comience su prueba gratuita de Magzter GOLD de 7 días para acceder a miles de historias premium seleccionadas y a más de 9,000 revistas y periódicos.

MÁS HISTORIAS DE BANKING FINANCEVer todo
ICICI Bank partners with PhonePe to offer instant credit on UPI
BANKING FINANCE

ICICI Bank partners with PhonePe to offer instant credit on UPI

ICICI Bank announced that it has partnered with PhonePe to offer instant credit on UPI to its pre-approved customers on the app of the digital payments company.

time-read
1 min  |
November 2024
Indiagold Eyes Major Expansion in India's Gold Loan Market
BANKING FINANCE

Indiagold Eyes Major Expansion in India's Gold Loan Market

Indiagold, a prominent fintech company specialising in gold loans, is set to disrupt the gold loan industry with its ambitious expansion plans and innovative product offerings.

time-read
1 min  |
November 2024
RBI CIRCULAR
BANKING FINANCE

RBI CIRCULAR

Facilitating accessibility to digital payment systems for Persons with Disabilities Guidelines

time-read
4 minutos  |
November 2024
Legal News
BANKING FINANCE

Legal News

The Supreme Court announced the launch of a new webpage on its official website providing summaries of landmark judgments.

time-read
5 minutos  |
November 2024
The Role and Impact of the Insolvency and Bankruptcy Code (IBC) in NPA Recovery
BANKING FINANCE

The Role and Impact of the Insolvency and Bankruptcy Code (IBC) in NPA Recovery

Indian banks, especially grappling with the mounting challenge of Non-Performing Assets (NPAs) within Scheduled Commercial Banks (SCBs), are experiencing a significant downturn in their capacity for credit recycling, resulting in reduced business opportunities and declining profits. However, various factors contributing to the severity of NPA problem are including macro-economic, political, and internal factors, emphasizing the complexity of the issue. With this background, the present study puts an effort to look at the role of the Insolvency and Bankruptcy Code (IBC) in NPA recovery and also showcasing its significance in resolving insolvency and maximizing creditor recovery.

time-read
8 minutos  |
November 2024
Big Data in Banking: Analysing its Role, Advantages and Challenges
BANKING FINANCE

Big Data in Banking: Analysing its Role, Advantages and Challenges

Globally Inflation started rising post April 2021 and went above the target range set by most of the Central Banks. It had remained low and dormant for a substantial duration since the global financial crisis. CPI inflation in developed countries such as US, UK and Euro zone, began to exceed their traditional target of 2% and continue to stay at these elevated levels till recent time.

time-read
5 minutos  |
November 2024
Is SIP Always the Best Option? A Look into Lump-Sum vs SIP During Volatile Markets
BANKING FINANCE

Is SIP Always the Best Option? A Look into Lump-Sum vs SIP During Volatile Markets

SIP is a method of investing a fixed amount at regular intervals, typically monthly, into a mutual fund. It allows investors to buy more units when prices are low and fewer when prices are high, a process known as rupee cost averaging.

time-read
6 minutos  |
November 2024
Strategies for Mutual Fund Retail Investors during market downturns
BANKING FINANCE

Strategies for Mutual Fund Retail Investors during market downturns

When stock markets experience a decline, mutual fund investors often face a sense of insecurity and apprehension. The volatility can lead to impulsive decisions, which, rather than securing financial health, may impair long-term investment objectives.

time-read
5 minutos  |
November 2024
The Rise of Green Marketing: Driving Sustainable Change
BANKING FINANCE

The Rise of Green Marketing: Driving Sustainable Change

Green marketing refers to the practice of promoting products or services that are environmentally friendly or sustainable. It involves incorporating eco-friendly elements into various aspects of marketing strategies, including product development, packaging, advertising, and distribution.

time-read
8 minutos  |
November 2024
Fraud Risk Management In Banking
BANKING FINANCE

Fraud Risk Management In Banking

Fraud risk management is a fundamental aspect of overall Risk Management within the banking sector. In India, banks adhere strictly to guidelines set forth by the Reserve Bank of India (RBI) to prevent, detect, and promptly report fraudulent activities.

time-read
6 minutos  |
October 2024