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Mutual fund monitor

Investing only to save tax might not be a good idea.

Investing only to save tax might not be a good idea. The top five tax plans have, on an average, given a return of 45% in the past six months. This is much lower than the 50% earned by the top five diversified funds. Even over three years, the diversified funds have generated higher returns, though there is not much difference in the category averages.

Easing liquidity conditions and relatively cheaper valuations have led to a rally in the midcap and infrastructure stocks. This has helped the funds based on these themes to generate even higher returns than diversified funds in the past six months. Reliance has bagged the top slot in both categories.

The takeaways

  • Investments in mutual funds in India comprised 7.7% of the gross household financial savings in 2007-8, a significant increase from 1.2% in 2003-4.
  • Households in India continue to hold 55% of their savings in bank fixed deposits, 18% in insurance and 10% in currency, as of 2007-8.
  • The mutual fund industry has a significantly high ownership from the institutional investors. Though retail investors comprise 97% in terms of numbers, they account for only 37% of the total industry AUM.