Exploring Untapped Potential of Mutual Funds

The Mutual Fund industry has seen unprecedented growth in the past 3 years. In November 2016, total assets managed by mutual funds touched a record high of ?16.5 lakh crores rupees, a year on year growth of 27%.

Total number of folios in India also reached a record number of 4.7 crore. However, mutual funds still suffer extremely low penetration in India. A 7% share of Assets under Management (AUM) of Mutual Funds to GDP is significantly lower than some other emerging economies like Brazil (42%) and South Africa (33%).

Introducing Direct plans of mutual funds

MoneyFront aims to highlight the true potential of mutual funds to investors by firstly adopting the no-conflict option of direct plan of mutual funds. Direct plans are an alternative to the regular plans of mutual funds where you can skip the distributors and agents and invest directly with the Fund House.

Exploring Untapped Potential of Mutual Funds A direct consequence of this is an increase in returns by up to 1.5% annually, as the commissions paid to the distributors/agent are not charged to the scheme. MoneyFront, in its endeavour to provide maximum benefits to clients offers only ‘Direct Plans’.

For investors who are not well-versed about mutual funds or who need help with their asset allocation, MoneyFront also offers investment advisory that provides model portfolios and scheme recommendations tailor-made to the investor’s financial goals and risk tolerance levels. Over and above that, the investors have access to a vast library of news, views, developments, and statistics related to mutual fund schemes and everything else that impacts them.(read more...)

Total individual wealth in India is a whopping Rs 304 lakh crore, says Karvy

It expects the individual wealth in India to grow to Rs 558-lakh crore in 5 years

Total wealth held by individuals in India has grown 8.5% to Rs 304-lakh crore in FY16, according to Karvy’s India Wealth Report 2016. It expects the individual wealth in India to grow to Rs 558-lakh crore at a compounded annual growth rate (CAGR) of 12.9% over the next five years. 

Total individual wealth in financial assets in India grew 7.14% to Rs 172-lakh crore in FY16, the report says, much slower than in FY15 when wealth had grown nearly 19%. The slower pace of growth has been attributed to the bleak performance of direct equities. Karvy expects financial assets to grow at a faster pace of 14.73% CAGR, nearly doubling in the next five years. 

Growth in alternate asset classes in FY16 stood at 84.70% vis-à-vis FY15. Karvy predicts the growth to continue in the next five years although at a slightly slower pace. At the same time, Karvy also cautions against more ‘Black Swan’ events like demonetisation in the future, which will change the way Indians perceive wealth. 


Going ahead, Karvy expects more wealth to enter the formal financial system given the government’s demonetisation programme. As a result, savings bank deposits, fixed deposits and small savings schemes to be most sought after investment avenues even for the next year. 

Over the long-run, Karvy says, this wealth will eventually find its way into asset classes such as equities, mutual funds, etc. On the other hand, the proportion of investments in physical assets such as gold and real estate will reduce. Read more.