Capital markets have arisen to be at the Centre stage of the Indian financial system from a miniscule impact it had upon the financial markets a decade earlier. Capital market in India has also witnessed a significant increase in institutional setup and development. Institutions have evolved and developed in the form of a diversified structure of mutual funds.
A mutual fund is a special purpose institutional setup established specifically for investment purposes and it acts as an investment conduit. Its primary function is to pool and gather resources (savings) from small investors, build a bigger corpus of large resources and invest them into a well-diversified portfolio of sound investments. It aims to maximize returns as much as possible while keeping the quantum of risk associated with equities low.
Despite being available in the market less than 10% of Indian households have invested in mutual funds. A recent report on Mutual Fund Investments in India published by research and analytics firm, Boston Analytics, suggests investors are holding back from putting their money into mutual funds due to their perceived high risk and a lack of information on how mutual funds work.
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