After Liberalization, Privatization and Globalization policies in India, saving people started looking at the corporate sector, which attracted them towards institutional investment. Today there are plenty of investments avenues open in the financial market for an investor with an investable surplus. Some of them include Bank Deposits, Corporate Debentures, and Bonds where there is low risk but low return.
Investors may invest money in banks, bonds and corporate debentures where the risk is low and so are the returns. On the contrary, stocks of companies have high risk but the returns are also proportionately high. However, small investors are not in a position to invest on their own as they cannot successfully construct and manage investment portfolio. This is mainly due to the small size of their funds, lack of expertise and experience, etc. The recent trends in the Stock Market have shown that an average retail investor always lost with periodic bearish trends. People began opting for portfolio managers with expertise in stock markets that would invest on their behalf. There are many institutions in India, which provide wealth management services. However, they proved too costly for a small investor. At the same time a significant institutional development in the form of a diversified structure of mutual funds took place in India. These investors have found a good shelter with the mutual funds.