The Indian mutual fund industry has been showing steady growth for the past decade now and what is important to note is that the number of folios (an indication of a number of investors) managed by this industry stands at 13.13 Crs as of 30th April 2022. This signifies how there is a growing trust in mutual funds as a viable financial asset for long term planning, mode to participate in the equity markets or wealth creation. There are 44 players in the mutual fund industry today where we have seen many new entrants as well as exits and mergers which have happened over the years, and we may expect more in the future as the industry grows and consolidates. L&T Mutual fund has also been a part of a very successful merger in the past which gives us the rich experience to navigate through the next phase of our growth journey as a part of a leading global financial institution (subject to regulatory approvals). One thing that we would like to assure all our investors is that our customers will continue to remain at the core of this transition and the track record and common values of both the entities are committed to it, as is the industry in general through its track record of taking care of the investors whenever fund houses have merged.
Having said that, how should an investor view this industry in these volatile /uncertain times?
Sharing a personal experience to drive the point.
I had invested in a fund way back in 1998 and as it happened so, shifted homes, did not change the communication address for that investment of mine and pretty much forgot about it. It was not till recently when I was reviewing some of my old investments that I realised that this investment over the last 24 years has increased into a very healthy sum of money. The markets since 1998 have seen two cycles of the downturn and a fair share of volatility. My point is if your financial goal is long-term in nature, getting worried about the short-term blips and basing your investment decisions on that is not the desirable way when investing in mutual funds.
If you believe in the growth story of your country and the fundamentals are looking strong, we have now enough and more data points in the last couple of decades where the mutual fund industry (and the markets) have been able to bounce back from its troughs. What is significant now is the stringency of the regulatory bodies in ensuring that the industry, in general, has optimised many processes and built checks and balances to mitigate risk. Investor education continues to play a continuous part in the organisation strategy of most of the players in the market. The impetus and thrust on digitisation continue to be a great move towards customer convenience and democratisation of the financial asset class which for a very long time was thought to be understood only by a handful of experts.
For eg, investing small amounts into an Index fund category at every small fall in the market is a good food for thought for you if one is looking at the next 5-10 years of the investment horizon.
I do it as I believe that the index is a good reflection of the growth of the financial markets over a longer horizon.
Invest as per your financial goals.