RISING CLOUT

MUTUAL FUNDS ARE WEALTH GENERATORS AND HAVE BEEN A BRIGHT SPOT IN THE INVESTMENT ARENA

Even though the Indian mutual fund industry has been in existence for nearly 60 years, the growth that's been seen in the past decade and a half has been nothing short of spectacular.

Increasing investor awareness of mutual funds coupled with investor-friendly regulatory changes, financial inclusion and alpha generation from mutual fund schemes have led to increased investor participation in domestic mutual funds.

The Indian mutual fund industry has average assets of around ₹40 lakh crore as on January 23, as against ₹4.78 lakh crore in January '09. The equity assets rose sharply from ₹93,800 crore to nearly ₹15.5 lakh crore in the same time frame.

If we go 14 years back, then we see that one reform introduced by the Securities and Exchange Board of India (SEBI) changed the industry overnight. In August '09, the markets regulator banned entry load. Though initially the industry saw sluggish growth, that one announcement made MFs extremely investor-centric.

Since then many changes have been made on the regulatory front and even fund houses came forward and made significant changes to improve investors' participation in the Indian mutual fund industry. This article will throw light on a few important changes in the Indian asset management industry in the last 14 years.

GOING THE SIP WAY

Indian investors have always had a fondness for savings, be it bank fixed deposits (FDs), real estate, gold or traditional insurance plans.

Systematic Investment Plans (SIPs) have, to some extent, encouraged investors to invest rather than rely only on their savings.

However, here we do not have data for the past 14 years, but five years' data is quite intriguing.