Key learnings of the Mutual Fund Industry in 2021

The year 2021 was no less tumultuous than 2020. In such a year, how did the mutual industry perform? Read this article to know the learnings that the Mutual Industry took as a whole from the year 2021.

With the start of the new year 2022, the mutual fund industry has experienced an accelerated evolution and major boost in the past few decades. 2021 has been a year wherein the government focused on certain amenities that they hoped to provide to the citizens of their country. This included lower interest rates, ample liquidity, and a surge in the rate of vaccination. As we step into the post-pandemic era and adjust to the 'new normal', let's look at a few key learnings of the mutual fund industry in 2021. But, before we get to that, let's quickly recall what is a mutual fund.

What is mutual fund?

Mutual fund is a financial investment vehicle that allows different individuals to pool their money and invest it in a variety of securities such as real estate, equities, cash and cash equivalents, debt securities, etc. This pooled investment is managed by a financial market expert, commonly known as the fund manager who holds in-depth knowledge and experience about the workings of the mutual funds.

Key learning of the mutual fund industry in 2021

Here are a few key learnings of the mutual fund industry experienced by investors in the last year:
  1. Growing popularity of passive mutual funds
    While actively managed mutual funds continue to hold their position in the mutual fund markets, the industry has experienced a sudden boost in the passively managed mutual funds in the past few years. Investors investing their assets in passive funds enjoy certain benefits such as low management cost, simple structure, returns similar to the index they are tracking, etc. Whether you choose passive funds or active funds must entirely depend on your personal goals and needs.
  2. Enhanced digital experience
    With the government trying to control the spread of the deadly COVID-19 virus, there were mandatory lockdowns in the entire country. This forced several businesses to jump-start their digital journey and revamp the digital experience offered to their clients. This also meant a complete digital-enable customer experience for investors investing in mutual funds as well.
  3. Opportunity cost
    Perhaps one of the biggest opportunity costs an investor might face is choosing to not invest in the markets due to any reason. One must understand that they lose out on the opportunity on making significant returns on their investments. There are several investment options available to an investor. So, an investor can compare mutual funds and choose a mutual fund scheme whose objectives align with their financial goals, personal goals, investment horizon, and risk profile.
  4. Leveraging the universal growth story
    Thanks to the development in technology and increased need of digitalization among consumers, investors today not only get to experience the domestic markets but also the global markets. Today, an investor can easily invest in international funds and enjoy the benefits offered by that particular market region.

More and more individuals have turned to mutual fund investments than ever before. So, what are you waiting for? Invest in mutual funds today and get one step closer to achieving your financial goals and objectives. Happy investing!


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