Inside the Record Year for India's $585 Billion Mutual Funds Industry.

India's mutual funds industry is experiencing a record-breaking year, with a surge in assets under management and the addition of over 20 million new investment accounts. This growth is driven by young Indians seeking financial gains and investing in equities through smartphones. The industry is expected to attract a larger share of households' financial assets in the future, as mutual funds currently make up less than 9% of these assets compared to 45% for bank deposits. The pandemic has accelerated this trend, with rising financial literacy, improving incomes, and stellar stock market returns attracting new investors. However, there is still significant room for growth, as there are only about 40 million unique mutual fund investors in a country of over 1.4 billion people. The industry's steady inflows have helped shield the market from foreign outflows, but it remains to be seen if investors' appetite for equity investments will remain strong during market shocks. The accessibility of mutual funds has improved with technology, making it easier for individuals to enter and exit their investments. The industry's average assets under management have increased by 8 trillion rupees ($96 billion) in the first 11 months of 2023, the largest increase on record. New entrants are being attracted to the market, and BlackRock is planning to return to fund management in India. The financialization of savings is seen as crucial for India's rapid economic growth, and there is potential for increased retail participation if simple, transparent, and affordable products are offered. [Extracted from the article]

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