Scope of Mutual Fund in India

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SCOPE AND GROWTH OF MUTUAL FUNDS IN INDIA Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the Unit Trust of India effective from February 2003. The Assets under management of the Specified Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the industry as a whole from February 2003 onwards.Investement in Indian Matual Market The Indian mutual fund industry has significantly high ownership from the institutional investors. Retail investors comprising 96.86 per cent in number terms held approximately 37 per cent of the total industry AUM as at the end of March 2008, significantly lower than the retail participation.Out of a total population of 1.15 billion, the total number of mutual fund investor accounts in India as of 31 March 2008 was 42 million (the actual number of investors is estimated to be lower as investors hold multiple folios). As per the Invest India Incomes and Savings Survey 2007 of individual wage earners in the age group 18 to59 years conducted by IIMS Dataworks, only 1.6 per cent invested in mutual funds. Ninety per cent of the savers interviewed were not aware of mutual funds or of investing in mutual funds through a Systematic Investment Plan (SIP). The mutual fund penetration among the paid Indian workforce with annual household income less than INR 90,000 was 0.1 per cent.
Mutual Funds vs Other Investment OptionsThe Indian mutual fund industry is in a relatively nascent stage in terms of its product offerings, and tends to compete with products offered by the Government providing fixed guaranteed returns. As of December 2008, the total number of mutual fund schemes was 1,002. Debt products dominate the product mix and comprised 49 per cent of the total industry AUM as of FY 2009, while the equity and liquid funds comprised 26 per cent and 22 per cent respectively. Open-ended funds comprised 99 per cent of the total industry AUM as of March 2009.While traditional

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