Mutual Fund Investment In India

All About Investing in Mutual Fund in India

Planning to invest in mutual fund? Before sailing in the boat, it is better to first understand what mutual fund is all about. A mutual fund is investment pool; that collects money from retail and institutional investors to invest in a combination of debt and /or equity paper. It is managed by professionally qualified and experienced fund manager who leaves no stone unturned to generate the best possible “risk adjusted return”.

Mutual fund was introduced in the year 1963 in the form of UTI and it was in the year 1994-95; private sector mutual funds with same tax benefits were allowed.  All the Mutual Funds India have to adhere to the rules and regulations formulated by SEBI.

Role of mutual funds

• Providing safe and decent real returns to the investing community
• Aiding in capital formation in the economy
• Investing in various debt and equity paper of government, PSUs, body corporate and banks
• Helping in large scale corporate to deploy large sums of money for short period of time
• Providing alternate route of investments to retail, HNI’s and corporate organizations.

Benefits of mutual fund

• It is highly regulated sector that provides liquidity and transparency.
• Even small investments of just Rs. 500 every month in mutual funds can generate good accumulation of wealth
• SEBI oversees investor protection and education of retail investors.
• Section 80cc of IT Act has allows certain tax saving mutual funds to save tax.
• Investors have several risk mitigation tools like STP, SIP, SWP, balanced funds etc
• Ready information and minimum paper work makes the work of investors easy.

Future of mutual funds

There is huge growth potential for the growth of Mutual Fund Companies in future. The role that investment has played vital role in fuelling the economic growth of the country cannot be denied.  Future of mutual fund is bright in India. This type of investment is most popular form in the country because of its diversification and professional management.

Below are the important aspects pertaining to the future of mutual funds in India:

• Mutual funds have witnessed growth rate of 100% in previous 6 years.
• Saving rate is 23%.
• There is huge scope in future expansion of mutual fund industry.
• Many foreign based asset management companies are venturing into Indian markets.
• SEBI has permitted the introduction of commodity mutual funds.
• Mutual funds has scope of penetrating into the rural and semi urban.
• With talented and experienced financial planners in the market, people are provided with better financial planning.
• There is effective corporate governance of mutual funds.

Mutual fund is the safe investments that anyone can ever think of and there is no need for a person to be worried of flight risk in the sense that you will not wake up one fine morning to find out that the fund company you have invested with has run away with the money.

This is so because mutual fund companies are regulated and supervised by SEBI and AMI and the license to run a mutual fund company is given after as much due diligence as is done while giving licenses to the bank . In other words mutual fund is as safe as bank with low flight risk.