History of Mutual Funds

Quick Links: Website | Play Store | App Store | Instagram | LinkedIn The history of mutual funds in India can be broken down into five main phases, each representing an important step in how the industry has grown and evolved. Here's a simple way to look at it:

1. The Beginning (1964-1987)

This is when mutual funds started in India. In 1963, the government set up the Unit Trust of India (UTI) to help people invest their money in a safe, collective way. For the first few decades, UTI was pretty much the only mutual fund around, and by the 1980s, it had grown to manage a lot of money—around ₹6,700 crores (which was a huge amount at the time).

2. The Growth of Public Sector Funds (1987-1993)

In the late 1980s, other government institutions like SBI (State Bank of India), LIC (Life Insurance Corporation), and other public banks started their own mutual funds. This was the first time mutual funds outside of UTI appeared, which gave people more options. By 1993, the industry was managing around ₹47,000 crores in total.

3. The Entry of Private Players (1993-2003)

In 1993, things started to change dramatically. The Indian government allowed private companies to start mutual funds. So, private banks and foreign companies came into the market, and there were suddenly many more mutual funds for people to choose from. The Securities and Exchange Board of India (SEBI) also began regulating these funds to protect investors and make sure everything was fair. By 2003, there were 33 different mutual funds in India, managing more than ₹1.2 lakh crores.

4. The Period of Challenges and Consolidation (2003-2014)

In 2003, UTI was split into two parts, and the mutual fund market began to consolidate. Some smaller mutual funds merged with larger ones. Then, in 2008, the global financial crisis hit, and many people lost confidence in mutual funds because stock markets around the world crashed. The SEBI also made some changes, like abolishing the “entry load” (which was a fee that people paid when they bought mutual funds). This made it harder for the industry to grow quickly, and for a few years, it didn’t do so well.

5. The Modern Era (2014-Present)

Since 2014, mutual funds in India have been on a huge growth path. The government and SEBI took steps to encourage more people to invest, especially in smaller cities where mutual funds weren’t very popular. The industry started to grow again, and in 2017, the total value of all mutual funds in India crossed ₹20 lakh crores for the first time. Today, the mutual fund industry is worth over ₹67 lakh crores, and millions of people across the country have invested in mutual funds. Key Drivers of Growth:

• SEBI’s Reforms: Regulatory changes by SEBI, especially in 2012, helped restore investor confidence and encouraged more people to invest in mutual funds.

• SIP Popularity: SIPs played a major role in helping small investors participate in mutual funds, offering a disciplined, long-term investment approach.

• Distributors’ Role: Mutual fund distributors helped in reaching smaller towns and educating investors, enabling them to invest and stay invested even during market fluctuations.
  

Conclusion:

The mutual fund industry in India began with just one government-backed fund, UTI, and has grown into a large sector with public, private, and international players. Over time, despite challenges like the 2008 financial crisis and Covid-19, the industry has expanded due to more investment options and better regulations to protect investors.

Today, mutual funds are one of the most popular ways for people in India to grow their money. If you’re thinking about investing in mutual funds, check out our app, Miles Wealth.

We specialise in offering personalised mutual funds based on your risk profile and financial goals. Our app makes investing simple by suggesting funds tailored to your needs—whether you’re saving for a big purchase, retirement, or any other milestone. With Miles Wealth, you’ll have a customised investment strategy to help you reach your goals with confidence and ease. Quick Links: Website | Play Store | App Store | Instagram | LinkedIn