What will you do if you land a windfall? Buy a gadget or a mutual fund? If you spend it, you're one of a million who would do so, but if you invest it, then you belong to an elite category—the 10 per cent Indians who have invested in mutual funds. This is the result of a study conducted by Boston Analytics, which has revealed that mutual funds are still an alien financial product for 90 per cent of Indian households. The study, based on 10,000 respondents in 15 cities and towns, has found that most of the participants do not have sufficient knowledge about mutual funds and, hence, consider them to be a risky proposition. A majority of the people in tier II and tier III towns do not know where and how to invest in such assets.
However, the study discovered that the opinion of existing investors was diametrically opposite. Nine out of 10 respondents cited professional management and benefits of diversity as the reasons for investing in mutual funds. These investors are active in tracking the performance and net asset values of funds. On the flip side, 15 per cent of the existing investors do not fully know about the funds they have invested in. They seem to have little or no information on the kind of funds (growth/dividend) and their risk profile.