Systematic Gains

Popularity of MFs will provide stable risk capital

- 

The latest Annual Report of the Association of Mutual Funds in India (Amfi) indicates that household investors are rapidly adopting mutual funds (MFs).

More retail investors are investing through MFs and they are investing in a disciplined, staggered fashion by using systematic investment plans (SIPs). They are also holding their portfolios longer. All this augurs well for the Indian economy, as well as for the prospects of household wealth creation. As household funds move into equity assets, new businesses receive easier access to capital, which will help boost entrepreneurship. Since fund allocation is done by professionals, there is less risk of capital erosion for investors and funds are deployed across sectors. As equity assets generate high rates of long-term returns, this will enable wealth creation for households.