Monthly Archives: July 2017

Concept and Evolution of Mutual Funds in India

Mutual funds in the Indian investment market have become really famous as of now. Everyday new investors are inclining towards this new mode of investment. This mode of investment pools in money from various investors and then it invests that money in the stock markets. Thus the person investing is not entitled to complete profits nor has he/she to bear the full loss when the stocks his mutual fund manager invested into takes a hit in the stock markets.

The mutual funds in this country have a short and fresh history. It began in the year of 1963 when the country saw the stat of mutual funds as a new option for investment. It started with the formation of the Unit Trust of India (UTI). This was the initiative of the Indian Government along with the Reserve Bank of India. Much later in the year of 1987 the State Bank of India came up with the SBI Mutual Fund and it was the first Non- UTI Mutual fund in India and this marked a new beginning in the Mutual Fund industry in the country.

In the year of 1993 the market of Mutual Funds in India saw a very drastic change as this marked the entry of the private companies in the industry. The entry of the private firms initiated the competition which got fierce with the passage of time and led to the development of Mutual Funds as a whole in the Indian markets. When the Securities and the exchange board of India (SEBI) Act came into being and was passed in the year of 1992, it started working in the context of investments and regulations regarding them in the Indian markets. The SEBI Mutual Fund Regulations came into being in 1996. Since then this mode of investment has grown in the Indian market and Mutual Funds have grown due to the private companies coming up with new and progressive schemes and also the setting up of shops by the foreign firms and companies in India and their mergers with Indian firms has made the Mutual Funds market grow exponentially.

As the market and the investor base expanded due to the mutual Funds becoming more popular, there arose a need of another specific body to govern and regulate the companies involved in the market of mutual funds thus in 1995, the Association of Mutual Funds in India (AMFI) came into being and this was a non profitable organisation. The sole objective of the Association of Mutual Funds in India or the AMFI was to promote and mandate healthy marketing practises, practises which were ethical in nature in the Mutual Fund markets in India. SEBI which is the governing body of the investments and activities of the sort has made the certification of the AMFI mandatory for all the companies indulging in the selling and the marketing of Mutual Funds in India.

Since then the Mutual funds have evolved very much partially due them being very less risky and partially due to the flexibility and the fulfilment of variety of investment criteria by them that are set by the various investors as per their financial condition and proclivity to take risks. Online platforms provide thorough details regarding mutual fund investments, and also suggest the best mutual funds to invest in.