The Performance and Challenges of Mutual Funds in India
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Abstract
Since its inception in 1963, the Indian mutual fund industry has undergone significant growth across various metrics, including the number of fund houses, schemes, funds mobilized, and assets under management. A key objective of the mutual fund industry is to attract and mobilize a significant portion of Household Savings (HHS), thereby enabling small savers to benefit from economic growth by investing in assets that offer better risk-adjusted returns. However, despite notable progress, the industry has not fully realized its potential. It lags behind developed economies and many emerging economies in several aspects. Challenges such as low penetration ratio, lack of product differentiation, limited investor awareness and ability to convey value to customers, waning interest of retail investors in mutual funds, and the evolving nature of the industry pose significant hurdles. The study suggests that to fully leverage its potential, the industry must address these challenges.
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