PowerMF Blog – Empower Yourself

The Budget has brought out an interesting opportunity for the Indian Mutual Fund Industry. (See Link)  It is proposed that Foreign Investors can invest in Mutual Funds in India. While complete details are still awaited, this could be one of the important milestones in the Indian Mutual Fund Industry.

While lot of arguments can be put forward against the move, including

a. Industry is yet to even scratch the surface of the Indian Investor,

b. Yet to completely create confidence in the Indian Investing Community

c. Even within India, the focus (and hence high % of the AUM) are in the hands of the corporate & institutional investors

d. Any focus on new class of investors may reduce the already declining interest of the retail Indian investor in this MFs over the last year or so

Indian Thali

I still believe that the move allowing a new class of investor in the Mutual Funds. This is expected to provide a lot of positives to the MF industry. In my view, the following are the positives for the Industry:

a. Ability to access a new class of investor, who is expected to have far higher ‘average ticket size’

b. Positive impact on the range of products and services offered in line with international products (while I believe that the Indian MF industry is pretty close to International best practices, there are still certain areas which can be of additional value to the domestic industry.

c. Effectively channelising the investment interest of foreign investors in India in a hopefully easy and efficient manner. Thus making the access to the Indian markets by foreign investors easy.

d. Brininging in the best practices in fund management

e. Moving closer towards a open system of fund management across geographies (as Indian MFs are already allowed to invest in foreign markets)

I believe that this could  be an important development for the Industry. Waiting to see this getting implemented effectively and more importantly the response of the Industry for this opportunity.

Happy investing

Fundu Vishy

Your Mutual Friend

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