From the Executive Editor

Money Today Executive Editor Sarbajeet K Sen on how the mutual fund industry has changed over the past two decades.
     Print Edition: June 2013

It was 20 years ago in July 1993 that Kothari Pioneer Mutual Fund set up shop in India as the first private sector fund house. Before that, mutual fund offerings were through the Unit Trust of India and a clutch of asset management companies (AMCs) floated by government-owned entities that included public sector banks, the Life Insurance Corporation and the General Insurance Corporation.

The mutual fund industry has witnessed a sea change over the past two decades. The industry's assets under management (AUM) have grown manifold, many new players have entered the fray while some have fallen off or merged (including Kothari Pioneer that was gobbled up by Franklin Templeton), new types of funds have been placed on the shelf and regulations have been tightened to ensure consumer protection.

At the end of 1993, the industry's AUM stood at Rs 47,000 crore. Today, it stands at over Rs 8,25,000 crore. From barely a dozen fund houses in March 1994 (which included five private companies), we have today a total of 43 AMCs offering 1,229 schemes including a plethora of options in fixed income, equity, gold and hybrid categories.

As our cover package for this annual mutual fund edition tells you, the regulatory framework under which the industry operates has been upgraded and tightened to make it progressively more consumer-friendly. This included caps on sector or company exposure, mandatory disclosure of net asset value of schemes on a daily basis, norms on advertisements to ensure that buyers are not misled and the game-changing regulation on 'no-load' (or no upfront commission) in August 2009 making mutual funds one of the cheapest options among financial investment products in terms of transaction costs for consumers.

Amid these changes, the better performing funds have rewarded investors with consistent returns. Some funds, such as Reliance Growth Fund, HDFC Equity Fund and Franklin India Prima Fund have returned more than 20% CAGR over 15-20 years.

In this issue, we bring to you the funds that emerged as the best performing ones in 2012-13, the 20th year of mutual fund reforms.

Mutual funds, which enable investors to leverage the power of various asset classes with the help of professional expertise, remain one of the best investment vehicles, especially for those who do not understand the markets or lack time to track developments on a regular basis. A glance through the rankings could give you a fair idea of the funds that you should be looking at while making that investment decision.

However, as mutual funds say: past performance is not an indicator of future performance. There could be new funds doing better in the coming months. So, do your homework and pick your advisor's brain to structure your portfolio appropriately.

Executive Editor

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