Deepak Parekh Emphasizes the Role of Mutual Fund Distributors in Promoting Long-Term Investment.

Deepak Parekh Emphasizes the Role of Mutual Fund Distributors in Promoting Long-Term Investment.

Asif Iqbal | September 15, 2023 | 04:44 PM IST | Breaking News, India | Follow on Google News

Deepak Parekh Emphasizes the Role of Mutual Fund Distributors in Promoting Long-Term Investment.

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Deepak Parekh, Chairman of HDFC AMC (Asset Management Company) and HDFC Life, highlighted the importance of mutual fund distributors in ensuring that individuals remain invested for the long term in the wake of misinformation and misguidance, often referred to as ‘WhatsApp University,’ circulating in the market. Despite regulatory safeguards, Parekh expressed concern about the prevalence of misinformation, which leads many ill-informed investors to abandon mutual funds in favor of direct stock market investments based on occasional tips, often resulting in financial losses.

Promoting Financial Literacy and Distributor Role

Speaking at an event, Deepak Parekh stressed the critical role that mutual fund distributors must play in promoting financial literacy and discouraging impulsive decisions driven by misinformation. He emphasized that deeper mutual fund penetration in India would require concerted efforts in financial literacy. While India’s mutual fund penetration recently crossed 16% of the gross domestic product (GDP), it still lags significantly behind the global average of approximately 80%.

Deepak Parekh also highlighted the broader issue of low financial penetration across various segments of India’s financial sector. For instance, the mortgage to GDP ratio in India stands at 11%, compared to over 18% in China and 52% in the United States. Similarly, insurance penetration in India is at 4.2% of GDP, while the global average is around 7%. These statistics underscore the potential for growth and increased participation in India’s financial markets.

Growth in Mutual Fund Industry and Need for More Distributors.

Parekh noted that the number of mutual fund folios in India has risen from approximately 90 million three years ago to over 150 million at present. Additionally, more than half of the new systematic investment plans (SIPs) are being registered in smaller towns, highlighting the expanding reach of mutual fund investments.

Despite global market volatility, domestic investors have shown faith in the Indian markets, and domestic equity inflows have contributed to the resilience of Indian markets to foreign capital flow volatility. However, Parekh stressed that there is more work to be done to foster growth in the industry.

He pointed out that while India has over 500 million PAN card holders and more than 110 million demat accounts (with over 60 million opened in the last three years alone), the Indian mutual fund industry has reached only about 40 million investors. This disparity underscores the substantial growth potential for mutual funds in India.

Asif Iqbal

Asif Iqbal is a seasoned news writer with a passion for delivering the latest updates to the public. Currently serving as the senior writer at VoM News, a prominent news outlet known for its comprehensive coverage of diverse topics, Asif has established himself as a reliable source of information. With a keen eye for detail and a knack for storytelling, he consistently provides readers with well-crafted articles that cover a wide range of news categories. His dedication to journalistic integrity and his commitment to staying ahead of the news curve make him an invaluable asset to Vom News, ensuring that readers are always well-informed on the issues that matter most. You can find his work and stay updated on current events by visiting vomnews.in.