Mutual Funds Trends in 2024 As we enter 2024, the mutual funds sector is evolving, shaped by global economic shifts, technological advancements, and changing investor behaviour. The mutual fund industry is at a turning point. Domestic investors are playing a bigger role, providing stability against the flow of foreign investments

By Nilesh Shah

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India's Mutual Fund industry is on a growth spree, with a projected 21.5% CAGR by 2027. Our AUM has risen sharply to INR 49.04 trillion by November 2023, up from INR10 trillion in 2014. We're now serving over 16 crore accounts, thanks to supportive regulations, appealing equity schemes, and tech progress.

Yet, when compared to unregulated investments, there's more ground to cover. About 18 crore Indians are venturing into cryptocurrencies, 2 crore into high-risk Ponzi schemes, and nearly 10 crore are engaged in online gaming platforms like Teen Patti and Ludo, which lack investor protection. In comparison, over 4 crore investors have opted for the safer route of mutual funds. Our AUM-to-GDP ratio stands at 16%, well below the global average, indicating vast growth potential. Despite increased internet usage, our main business is still concentrated in top cities. We see growing interest from middle-income earners, yet only 2% of Indians invest in mutual funds. There's a huge untapped market waiting for us.

As we enter 2024, the mutual funds sector is evolving, shaped by global economic shifts, technological advancements, and changing investor behaviour. The mutual fund industry is at a turning point. Domestic investors are playing a bigger role, providing stability against the flow of foreign investments.

MARKET ANALYSIS AND EVOLVING TRENDS

Recent times have shown us how vital it is to understand market swings and to have strong plans for where to put our investments. As we move into 2024, these basic principles are more important than ever. The world economy is showing signs of getting better, but there are still unknowns, especially about interest rates and what's happening around the world politically. I've always believed in keeping a balanced mix in your investments – using the growth power of stocks and the steady nature of bonds.

The role of technology in mutual funds is something we can't overlook. The rise of fintech and new investment tools is changing our work, from algorithms to better systems for our investors

The role of technology in mutual funds is something we can't overlook. The rise of fintech and new investment tools is changing our work, from algorithms to better systems for our investors. Embracing these tech changes is vital for us to get better at what we do and to keep our investors engaged.

INVESTOR BEHAVIOUR AND DEMOGRAPHICS

The profile of investors is changing. More and more young people are getting into mutual funds, and they're really into technology and prefer digital methods for investing. It's crucial to educate these new investors about the importance of staying in for the long term and the risks of trying to play the market.

PREDICTIONS FOR 2024

The year ahead looks like it will be full of ups and downs. It's essential to balance your investments across Debt, Equity, Real Estate, and Commodities. This isn't the time to go heavy into stocks. Keep a balanced approach to stocks and see any downturns as chances to get in. We suggest keeping a balanced weight in stocks, leaning a bit towards bigger companies, and being careful with smaller and mid-sized companies.

To sum up, believe in the growth of India. Invest regularly – small amounts can really add up. Keep your eye on the long-term – great things need time to grow. And stick to your plan. Follow your investment strategy and don't put all your savings in one place.

Being consistent in giving advice is important: focus on long-term goals, make sure your investments are spread out, and don't make quick decisions based on short-term market changes. Being patient and disciplined in investing is crucial.

Staying invested through systematic investment plans (SIPs), maintaining a tactical liquidity buffer, and following a balanced asset allocation approach, appear to be the most optimal approaches for retail investors.

Nilesh Shah

MD, Kotak Mutual Fund

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