CEO Speak

Is the housewife next door putting her savings in mutual funds? Or is that elderly gentleman whom I greet every day in the elevator investing even a part of his retirement fund kitty into mutual funds? Is the shop keeper of the flourishing kirana store at the corner investing in mutual funds? While I would have loved a “Yes” to all the above questions, the chance of a “No” appears to be still high. As an experienced player in the Indian Mutual Fund Industry , our endeavour is constantly to make mutual funds simple, easy to understand and convenient to transact.

Today we at L&T Mutual Fund and many players in the market including the apex association of the industry are making continuous effort in investor awareness and investor education.

As a first time investor in Mutual Funds, one may be looking for financial assets which are low on risk, tax efficient and transparent. One may not be comfortable going all out into equity mutual funds, as all these years, they may have invested only in physical assets, and hence, to jump directly into the equity markets or equity mutual funds may be a big hurdle for them to cross. However, mixed (Hybrid) products like Equity Savings Funds, Dynamic funds or Balanced funds may be a prudent start for them as these funds invest primarily in debt instruments and have partial exposure to the equity markets giving relatively more efficient returns.

Similarly for someone who wants to invest into equities for the first time, the risk of the equity market either overshadows all rational or the glamour of the returns from the equity market overpowers all logical reasoning. However the fact remains that an experienced and qualified fund manager is responsible for managing the complexities of an equity mutual fund and an investor is required to be clear in his understanding of how much time does he want to invest and for what financial goal. If he is not comfortable investing a lump sum amount in the equity fund, he has an option of choosing the systematic investment plan (SIP) route to average out the risk and the cost of investment.

Today we have most of the fund houses which are in this business over a tested period of time and have seen various market cycles both on the debt and equity sides.Thus,every existing investor by now knows that the fund’s fundamental job is to take due care of the investor’s money and manage it efficiently for better returns. Investors who have made this shift from the traditional investments options to mutual funds are hence, seeing the benefits and the flexibility in their investments.

The industry AUM (Asset Under Management) has crossed Rs 23 lakh crores last month and this has more than doubled in the last five years. The total number of accounts (or folios in mutual fund parlance) stood at 7.35 Crores as of 31st May 2018. While this number still may look small compared to the number of Indians who have a bank account or a completely unknown and un accounted number of people who hold gold in the form of their investment and security, it is a significant figure to give a sense of direction to a common investor about how fast financial assets like mutual funds as a viable investment alternative is growing in India.

While I cannot predict the future or have a time machine to take you to the future, I am confident that mutual funds is set to be one of the fastest growing industries in the country in the near future and considering the un penetrated base of customers in India for the MF industry, we have a significant universe to work on.

Source: Association of Mutual Funds in India

Disclaimer – This document is for general information only and does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this information. This document provides general information on performance; financial planning and/or comparisons made are only for illustration purposes. The data/information used/disclosed in this document is only for information purposes and not guaranteeing / indicating any returns. This material provides general information and comparisons made (if any) are only for illustration purposes. Investments in mutual funds and secondary markets inherently involve risks and recipient should consult their legal, tax and financial advisors before investing. Recipient of this document should understand that statements made herein regarding future prospects may not be realized. Recipient should also understand that any reference to the indices/ sectors/ securities/ schemes etc. in the document is only for illustration purpose and should not be considered as recommendation(s) from the author or L&T Investment Management Limited, the asset management company of L&T Mutual Fund or any of its associates. Recipient of this information should understand that statements made herein regarding future prospects may not be realized or achieved. Neither this document nor the units of L&T Mutual Fund have been registered in any jurisdiction except India. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.

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