Fund managers in India need to gear up to meet the needs of sophisticated and wealthy investors, according to a report by a global analystics firm.
Wealth managers in India will need to meet the growing demand for product customization while also catering to the new generation of investors who will be more investment savvy.
According to the latest report from global analytics firm Cerulli Associates, India's mutual funds industry is in a transition phase as far as its product offerings are concerned.
Investment Dichotomy
It needs to maintain a delicate balance to serve the needs of the less financially savvy, untapped set of investors in remote cities, and, at the same time, cater to the needs for product customization and sophistication among the increasing number of high-net-worth individuals.
A survey of retail investors conducted for the Cerulli report, Asset Management in India 2017: Targeting the Next Growth Phase, showed mutual funds are the most widely used investment vehicles in India. Respondents cited long-term wealth creation as the top reason for investing in funds, followed by creating a retirement buffer and tax savings.
More Risk Required
A significant number of respondents to the report also showed an appetite for relatively riskier products, such as funds investing in the banking sector and mid-cap funds. Cerulli construed this as an early sign of a set of investors desiring products apart from those normally pitched to them.
Notably, one in five retail investors are willing to explore investments in exchange-traded funds (ETFs), after the encouraging response to a follow-on offer earlier this year of the Reliance CPSE ETF. This could also be an indicator of an early appetite for innovative products among these investors.
