Recent Trends and Challenges Faced by Mutual Funds in India

Abstract

Mutual Funds have emerged as an important investment alternative to invest in the capital market. After the announcement of the liberalization policy in 1991, the growth of the Indian economy has been miraculous and the per capita income has also increased. The Indian Mutual Fund Industry is witnessing a rapid growth as a result of infrastructural development, increase in personal financial assets, and rise in foreign participation. Mutual Funds in India are becoming a preferred investment option compared to other investment vehicles like Fixed Deposits (FDs) and Postal Savings that are considered safe. During the past two decades the growth of the upper middle and middle class in India has also been fabulous, and this is the group, which due to increase in income has enormous and changing needs, and is targeted by almost all mutual fund companies, but it is seen that these mutual fund companies have not succeeded enough to attract individual to invest in their products. The future of Mutual Funds to a great extent depends on Government policies and expectations of small investors. Transparency, innovative schemes, better services, liquidity, safety and higher returns in future will make Mutual Funds more effective provided if the industry meets the challenges prevailing.