Indian Mutual Fund Industry: Challenges and Future Prospects

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INDIAN MUTUAL FUND INDUSTRY: CHALLENGES AND FUTURE PROSPECTS Ms.Renu Introduction India has been the fastest growing markets for mutual fund industry. With progressive liberalization of economic policies, there has been rapid growth of capital market, money market and financial services Industry including merchant banking, leasing and venture capital (Tripathy, 1996). The increasing globalization of financial groups, rapid spread of…show more content…
21,805 crores.

Fourth Phase (Since February 2003): Following the repeal of UTI ACT 1963, it was bifurcated into two separate entities in February 2003. One is the specified undertaking of UTI, functioning under rules framed by government of India. Hence does not come under the purview of mutual fund regulations. The second undertaking, UTI Mutual Fund Ltd, (registered with SEBI) ; was sponsored by State Bank of India, Punjab National Bank, Bank of Baroda and Life Insurance Corporation. It functions under the mutual fund regulations and at the end of January 2003 had assets under management worth Rs. 29,835 crore.

Benefits of Mutual Fund Investment
Mutual fund investors enjoy the benefits of portfolio diversification, professional management at low cost and greater transparency compared to other financial institutions, such as banks, thrifts, insurance companies and pension funds.
Diversification: Investor can diversify his portfolio through mutual funds without requiring large amount of funds as mutual funds invest in a number of companies across different sectors and industries. It also helps him in spreading the risk over a range of securities. So the diversification reduces the risk as all the stocks do not decline at the same time and in the same proportion.
Professional Management: Investment in mutual funds also enables the investors to reap the benefits of professional management. Mutual fund team includes the
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