The expected growth of the Indian economy is pegged at 9.2%, according to the Economic Survey of India, 2022, which is much higher than the other developing economies at large. It is quintessential to understand that multiple factors have led to a growth-driven economy. The Indian economy’s revival from the tentacles of recessionary pressures due to various demand and supply shocks is extremely commendable. Similarly, looking into the growth of the industry in India, it is a lucrative market to invest in.
Will Mutual Funds go up?
Mutual funds have always been a keen driver of growth for investors looking for long-term investments and having smaller amounts to invest. Mutual funds also play a major role in the financial system of the country and are regarded as one of the most appealing investment opportunities that the citizens of India are willing to take. December 2021 witnessed the highest inflows into equity mutual funds since April 2018. The Association of Mutual Funds in India reported that the equity and equity-linked schemes received more than double net inflows over the last month and took the net inflows for the year as high as Rs. 96,669.97 crores. The numbers are of great significance as these inflows remain steady for ten months in a row and despite the rapid spread of the Omicron variant of the COVID-19 virus and the profit bookings by the FPIs, due to which the benchmarks went through great fluctuations. Thus, the question arises, is 2022 a good year for the mutual funds industry?
According to Nirmala Sitharaman, the Finance Minister, the mutual fund industry is currently valued at 38 trillion. It is expected to help several millennials to make decisions about their investments. The officials in charge of the asset management industry are also invited to the impeccable announcement of rationalization of surcharge. Also, as per the budget presented by the finance minister on February 1st, 2022, the tax on digital assets has been pegged at 30 per cent. The Finance Minister also proposed a tax deduction at source on payment of or on any transfer of digital assets. The rate decided on this aspect is 1 per cent above a certain monetary threshold mentioned by the Statute. Although the Indian Government has made no changes towards the tax regimes pertaining to mutual funds, Vishal Kapoor, CEO of, IDFC claims that taxation on the gains of digital assets would channel the funds from the digital assets towards mutual funds. This means there will be a major increase in the mutual fund industry in terms of wealth creation, and mobilization of wealth at the same time would be much more rapid than in earlier times.
For short-term gains, people were more attracted to cryptocurrency, which means that the changing taxation regimes would help investors rationally decide to invest in mutual funds. Thus, mutual funds are bound to rise after the proposals made in the Budget session.
The budget also proposed a surcharge on the long-term capital gains. This applies to any person whose long-term capital gain arises from the transfer of any type of asset at the rate of 15 per cent. The current rate has been capped at 15 per cent for any assessee occurring from the transfer of equity-oriented mutual funds. Similarly, for debt-oriented mutual funds, it can be observed that the rate is capped at 37%. According to Mitesh Chauhan, it is seen that the proposed amendments that are made would make the mutual fund industry more lucrative for investors to invest in. The amendment carried out is considered to be a positive investment at large. It is expected that the PM Gati Shakti will facilitate such mobilization of funds for the maximum creation of wealth under the pillar of mutual funds.
What are good mutual funds to invest in, in 2022?
As it can be seen that the mutual fund industry is expected to go up in 2022, one should also make some investments in the same. Therefore, the investors can look into Axis Bluechip Fund, BNP Paribas Large Cap Fund, Mirae Asset Large Cap Fund, Canara Robeco Bluechip Equity Fund, and Edelweiss Large Cap Fund. These mutual funds are good to invest in as they have rolled daily for the past three years, which makes them a safe and secure investment at large. It has also been seen that the consistency of the fund is quite good when it comes to the industry at large. Risk-averse investors looking at a long-term horizon should consider these funds owing to their safe and stable nature throughout. These funds are expected to grow in the upcoming years, which is a good sign for investors willing to invest.
For short-term, the investors can look into Edelweiss Banking and PSU Debt Fund, Franklin India Short Term Income Plan – Direct Plan, Edelweiss Banking, and PSU Debt Fund – Direct Plan, Kotak Banking, and PSU Debt Fund – Direct Plan, HDFC Medium Term Debt Fund – Direct Plan, ICICI Prudential Short Term Fund – Direct Plan, HDFC Corporate Bond Fund – Direct Plan, NIPPON INDIA SHORT TERM FUND – Direct Plan, Aditya Birla Sun Life Corporate Bond Fund – Direct Plan, and Aditya Birla Sun Life Short Term Fund – Direct Plan. On average, all these funds provide a return of 8.5-9% over the span of three years, which is again safe and stable for investment. There are chances of volatility in the short term, but a profit will provide good returns to the investors, and the country’s infrastructure sector will drive the major investments at large.
Conclusion
It can be seen that the mutual fund industry will be going up in 2022, and the investors will be attracted to such a market for short-term and long-term returns at large. Having mentioned the same, the budget has been focusing on infrastructure development through the scheme of PM Gati Shakti, and the focus will be on infrastructure-based securities for all the fund managers across the country. There is an expectation that as the country is at a revival stage, the investments will rise over a period of time, giving a boost to the mutual fund industry as well. Fund managers and mutual fund advisors are looking into such growth opportunities to tap in the maximum wealth from the public and make the entire process efficient, robust and effective.
