History of Mutual Funds, Check Mutual Funds History in India. Check Complete Details of Mutual Funds. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal and investments may be in shares, debt securities, money-market securities or a combination of these. These securities are professionally managed on behalf of the unit holders and each investor holds a pro-rata share of the portfolio, that is, entitled to profits as well as losses. Income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them.
A mutual fund is the most suitable investment scope for common people as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively lower cost. Now check more details for “History of Mutual Funds, Check Mutual Funds History in India” from below….
History of Mutual Funds
The mutual fund industry in India began in 1963 with the formation of the Unit Trust of India (UTI) as an initiative of the Government of India and Reserve Bank of India. Much later, in 1987, SBI Mutual Fund became the first non-UTI mutual fund in India.
Subsequently, the year 1993 indicated a new era in the mutual fund industry. This was marked by the entry of private companies in the sector. After that the Securities and Exchange Board of India (SEBI) Act was passed in 1992 and SEBI also formulate the new regulation on Mutual Fund in 1996 i.e., SEBI (Mutual Fund) Regulations, 1996, which for the first time, established a comprehensive regulatory framework for the mutual fund industry. Since then, several mutual funds have been set up by the private and joint sectors.
Currently there are around 44 mutual fund organizations in India together handling assets. Today, the Indian mutual fund industry has opened up many exciting investment opportunities for investors. As a result, we have started witnessing the phenomenon of savings now being entrusted to the funds rather than in banks alone. Mutual Funds are now perhaps one of the most sought-after investment options for most investors. We can also use mutual funds for a better post-retirement life.
As financial markets become more sophisticated and complex, investors need a financial intermediary who can provide the required knowledge and professional expertise on taking informed decisions. Mutual funds act as this intermediary.
Various types of mutual funds categories are designed to allow investors to choose a scheme based on the risk they are willing to take, the investable amount, their goals, the investment term, etc.
There are also other types of funds that one can invest in i.e., Closed-end investment funds, Exchangetraded funds (ETFs), Segregated funds etc. The level of risk and return depends on what the fund invests in.
Mutual funds are extended beyond the limits of equity i.e., Investor can also invest in Debt Instruments. The same principle is applicable i.e., higher the risk, the higher the returns.
Markets regulator, SEBI will soon issue norms which will allow e-commerce platforms for sale of mutual fund products, among other measures, to boost the Mutual Fund industry. The Securities and Exchange Board of India (SEBI) is also planning to implement know-your-client (KYC) procedure online, to simplify the process for mutual fund investors and attract wider number of customers.
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