From The Editor
It is an oddity of our times that stands out for its sheer starkness.
The stock market is roaring from one high to another, and the kitties of
mutual funds are swelling like never before.
It is an oddity of our times that stands out for its sheer starkness. The stock market is roaring from one high to another, and the kitties of mutual funds are swelling like never before. In fact, the assets under management (AUM) of mutual funds in India have doubled over the last 18 months to Rs 4 lakh crore.
You might think that's good news, since the safest bet for any retail investor interested in equities is an investment vehicle such as a mutual fund. But here's the irony of the situation in India: of every Rs 100 that mutual funds in India collect, less than Rs 15 come from retail investors as defined by the Securities and Exchange Board of India (SEBI).
Instead, it is corporate fund managers and high net worth individuals who are pouring money into mutual funds.
Therefore, the question to ask is: why aren't retail investors putting their money and faith in mutual funds, and instead taking the risky route of investing directly in stocks? One part of the answer seems to lie in the nature of our society.
According to some experts, the lack of social security in our country has seen mutual fund investments become the sixth or seventh layer of savings. Forget the unorganised sector, even in the organised sector, only 11-13 per cent of the working class will enjoy pension benefits after retirement.
The other part of the answer is that mutual funds aren't doing enough to woo the small investor, preferring to go for the 'low-hanging' money from corporate and high net worth individuals.
But that's not the only phenomenon that our cover package, put together by BT's Assistant Editor Mahesh Nayak, explores. We have gone on to look at why some of the recent mega IPOs such as the ones from DLF and ICICI Bank evoked muted response from small investors, how investment plans from life insurance companies are giving mutual funds a run for their money, and, finally, whether it's a good idea for the small investor to ride the stock market tiger on her own.
There are other interesting features that we have packed this issue with. Our special report on India's Most Investor-Friendly Companies throws up some surprising names that could well be the Sensex stocks of tomorrow.
Another feature on McKinsey & Co.'s Rajat Gupta-the man responsible for setting up the Indian School of Business in Hyderabad and now the Public Health Foundation of India-looks at his evolution as a social entrepreneur over the last decade or so. We had great fun putting this issue together. I hope you have as much fun going through it.
You might think that's good news, since the safest bet for any retail investor interested in equities is an investment vehicle such as a mutual fund. But here's the irony of the situation in India: of every Rs 100 that mutual funds in India collect, less than Rs 15 come from retail investors as defined by the Securities and Exchange Board of India (SEBI).
Instead, it is corporate fund managers and high net worth individuals who are pouring money into mutual funds.
Therefore, the question to ask is: why aren't retail investors putting their money and faith in mutual funds, and instead taking the risky route of investing directly in stocks? One part of the answer seems to lie in the nature of our society.
According to some experts, the lack of social security in our country has seen mutual fund investments become the sixth or seventh layer of savings. Forget the unorganised sector, even in the organised sector, only 11-13 per cent of the working class will enjoy pension benefits after retirement.
The other part of the answer is that mutual funds aren't doing enough to woo the small investor, preferring to go for the 'low-hanging' money from corporate and high net worth individuals.
But that's not the only phenomenon that our cover package, put together by BT's Assistant Editor Mahesh Nayak, explores. We have gone on to look at why some of the recent mega IPOs such as the ones from DLF and ICICI Bank evoked muted response from small investors, how investment plans from life insurance companies are giving mutual funds a run for their money, and, finally, whether it's a good idea for the small investor to ride the stock market tiger on her own.
There are other interesting features that we have packed this issue with. Our special report on India's Most Investor-Friendly Companies throws up some surprising names that could well be the Sensex stocks of tomorrow.
Another feature on McKinsey & Co.'s Rajat Gupta-the man responsible for setting up the Indian School of Business in Hyderabad and now the Public Health Foundation of India-looks at his evolution as a social entrepreneur over the last decade or so. We had great fun putting this issue together. I hope you have as much fun going through it.
