Good news for Mutual Fund Investors..!?

The market and investment regulatory body SEBI has recently issued a notification in an effort to boost mutual fund investments in India. Accordingly, in the next three years, more people will be able to invest in mutual funds as low as Rs 250 per month through SIP. The announcement made by the SEBI Chairman at an event organized by sbi Mutual Fund is a good preview for expanding financial participation in our country. As an observer of the financial markets, we see this as a positive development in our gradual progress towards overall financial inclusion,” said the Value Research CEO. In an article published by him, he mentioned that Rs.250 SIP would now be a good opportunity for those who could not invest in mutual funds earlier. He said the initiative would revolutionize mutual funds, particularly in india to reduce the cap on stocks and bonds, allowing mutual funds to pool investments from multiple individuals and access a diversified portfolio of securities that would otherwise be challenging for individual investors to build. The Rs 250 SIP will bring professional fund management and diversified portfolios to more people. This has been termed by the SEBI chairman as the 'satisfaction' of mutual fund products.
Also, it's drawn parallel to compact packaging. It makes consumer goods more widely available. Accordingly, he said, this strategy will be a great foundation as it can make mutual funds in the country accessible to a large section of the population who cannot afford to invest with the current minimum SIP amount of Rs 500 and Rs 1,000. While this is correct, mutual funds in india face significant challenges. Especially when we welcome new investors, we must also consider the obstacles they face. The many different types of funds available today, each with their own reasons and specifics, can be daunting even for experienced investors. This complexity presents a challenge to novices. The CEO of Value Research said that this would have an impact on low-income earners in particular.


According to data from Value Research, 61% of the total equity funds available to the indian investor were simple diversified funds in 2018. The pattern has now almost reversed after 2018, and by 2023, 48% of funds launched will be diversified, according to the CEO of Value Research. By 2024, just 37% of funds launched were diversified. If the goal of mutual funds was to provide simple, easy-to-understand investment options, this shift in the financial industry was completely anti-investor.

The complexity of mutual fund choices and the difficulty in selecting suitable funds require urgent attention. We must also recognize the need to simplify fund options and improve financial education, considering the potential for this overall financial participation. Otherwise, even well-intentioned efforts can lead to dire outcomes, says the Value Research CEO.
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Sowmiya Sriram

18/09/2024 06:11 PM