The mutual funds market in India and analysis of recent trends

Abstract

A mutual fund is a professionally managed collective investment that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities. The growth of mutual funds industry has been one of the fastest in the world. From 2004 to 2008, the Indian mutual funds industry grew at a rate of 29%i as against the global average of just 4%. The ratio of AUM (assets under management) to GDP has also increased from 6% in 2005 to 11% in 2009. The rapid growth in AUM of mutual funds has led to mutual funds becoming an important investment vehicle. This necessitates an analysis of the factors that have an impact on the growth of the mutual funds industry. It also makes sense to study the trends that have been observed in the mutual funds industry over recent years.