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Mutual Fund Industry to double by 2010: ASSOCHAM

Written by: Staff

New Delhi, Apr 5 (UNI) The Indian Mutual Fund industry will double to Rs 400,000 crore by 2010, at the Compound Annual Growth Rate (CAGR) of around 17 per cent, according to a study conducted by ASSOCHAM.

''Investors in the future will prefer mutual funds than choosing to park their surpluses in stock markets because of safer returns and lower degree of risk as compared to other markets,'' the study, conducted by the Associated Chambers of Commerce and Industry on 'Mutual Fund: Future's Wealth Creator and Wealth Saviour', to be released on April 8, said.

The study highlights that mutual funds will be one of the major instruments of wealth creation and wealth saving in the years to come and will give positive results, as investors are banking on the consistency in the performance of the Mutual Funds.

The presence of intelligent investors has already made the investment market scenario fiercely competitive, with in increased number of foolproof high-yielding investment opportunities. The industry has also witnessed several Mergers and Acquisitions.

The study also revealed that Mutual Funds will be available in a wide range of schemes, providing investment opportunities to all categories of the investors such as shares of corporate firms, commodities and debt instruments.

It further revealed that the futuristic nature of investors -- they invest for future security and certainty (54 per cent).

However there were some investors who invest in order to meet their current requirements (38 per cent).

In addition, the study also indicates that long-term investments are preferred more over medium and short-term investments, while disclosing that Mutual Funds are open to various kinds of risk including international risk, national risk, policy related risk, etc.

The major risks faced by investors is of uncertain market conditions that are hard to predict. The reasons could be attributed to the volatility/fluctuations in the market. Another large risk observed is the change in government policy, changes could be either by government or RBI on Mutual Fund related policies or the economy as a whole that affect the Mutual Funds market.

On the basis of the study, it has been observed that investors have now changed their view about the stock market.

Unlike earlier, investors have now developed more confidence and trust in stock market functioning. It is also observed that the investors, who directly make investments in stock market prefer cash/spot market to futures and options market. Investors now focus on a wider market rather than concentrating on a single area.

Among all the different areas of investment, it was found that investors are attracted more towards IT sector, followed by Banking, Drugs&Pharma, Automobiles, Petro&Gas, Infrastructure, Telecom, Engineering, Textile and Steel.

The ASSOCHAM study has compiled observations made by over 210 investors across the country.


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