Changing landscape of mutual fund through digitisation

The Association of Mutual Funds in India (Amfi) data highlights that as of July 2021, the mutual fund industry has about 4.17 crore SIP accounts through which investors regularly invest in different mutual fund schemes.

Further, the asset under management (AUM) stood at Rs 35,31,853 crore as of July 31. 2021, with a more than two-fold increase in a span of five years. Courtesy of the various digital platforms which has been at the forefront in simplifying the process, solving distributions and other obstacles for the customer.

While investor awareness campaigns such as the “Mutual Funds Sahi Hai” campaign have played a pivotal role in raising awareness and demand for mutual funds, the rise of digital investing platforms has made mutual funds more accessible to investors across India. Investors from urban-rural and rural places have increased dramatically in recent years as digital platforms have handled distribution constraints and other issues like streamlining the digital KYC.

From portfolio tracking in real-time to transaction convenience, these systems have simplified investing. This has resulted in even established mutual fund investors finding these platforms highly handy for making investment decisions, obtaining actionable investment data, trading with and tracking their investment portfolios.

Here are some of the ways in which digital platforms enable investors to invest in mutual funds:

Financial knowledge

Presently, most investors have inadequate knowledge of mutual funds and frequently struggle to begin their investment journey. Digital investment platforms have delivered important information directly to investors’ smartphones. Investors in smaller cities now have the same level of access to information and resources as investors in larger ones.

Choosing appropriate fund

Given the plethora of funds, the process of selecting the appropriate fund can become very overwhelming for individual investors. Digital investing platforms have made a significant contribution by assisting investors in the decision-making process. For instance, a variety of features to aid investors in making the best investment decisions, including assisted investment widgets and curated lists of suggested funds with consistent performance across multiple mutual fund categories, makes it easier for the first-time mutual fund investor to make an informed choice.

Digital documentation

Physical documentation for various investment activities such as KYC, purchase, and nomination has been one of the most significant obstacles to entry for ordinary investors. Digital investment platforms have eliminated paper from the whole investment process, from investor onboarding through investing. Investors may open accounts and conduct transactions directly from their phones using this frictionless investment procedure in a matter of minutes.

Investing through SIPs

Systematic investment plans (SIPs) have long been recognised as the greatest vehicle for individual investors to accumulate long-term wealth and have become a favoured investment tool in recent years. SIPs have become hassle-free to set up with the help of digital investing platforms.

Consolidated portfolios

One of the difficulties associated with making offline investments was tracking all mutual fund investments at once. Through digital investing platforms, investors can track their investments in real-time and get a consolidated view of their holdings across mutual fund companies. Most of the mutual fund houses mail consolidated account statements to the investors. This gives a clear picture to the investor about their holdings.

To summarise, digital investment platforms have simplified and streamlined the entire investing process for users, from research to selecting and tracking the funds. This has established mutual funds as a favoured investment option for crores of Indian investors in the future.