Mutual funds in India would be further energized with investment from major public sector undertakings following the Indian government’s approval which came in last week.
Lifting the restrictions on PSU investments in mutual funds after 8 years, the money held by asset management companies is expected to swell to an astounding Rs. 4 trillion, if the PSUs were to invest even a conservative 10% of their funds.
Currently at Rs. 3.5 trillion, total assets under management
by the mutual fund industry in India has grown by 51% over the
last one year. Almost two-thirds of these assets are built from
equity and fixed income schemes, and further invested in stable
instruments like government securities and bonds.
The government may issue directives to PSUs to invest more heavily
in fixed income schemes, while curtailing their equity exposure.
Indian mutual funds are on a roll with new participants and products
in the market. Mutual funds in India have performed more successfully
than their counterparts around the globe, bagging 8 of the top10
ranks over the last decade.
Over the last 5 years, Indian mutual
funds figure amongst the top 7 in the world. Outstanding performance
was recorded by 6 Indian mutual funds in the last 3 years. Franklin
Templeton, Merrill Lynch, Fidelity and HSBC registered elevated
returns in 2006.
Further infusion by global asset managers in the Indian mutual
fund market like JP
Morgan, AXA Investment, Mirage Asset Group
of Korea is likely by the end of 2007. Currently, 9 of the 30
asset management companies in India have global operations.
Prominent mutual funds in India like AIG Global, Birla Mutual
Fund, DSP Merrill Lynch, HDFC , HSBC, Prudential ICICI, JM Financial,
Lotus India, SBI and Franklin Templeton have ongoing schemes
which can be considered for investment.
