Page 31 - Banking Finance September 2024

ARTICLE

The Evolution and

Future of the Global

Mutual Fund

Industry

Dr Rakesh Agarwal

The global mutual fund industry has seen significant transformation over the last decade, driven
by various factors such as technological advancements, changing investor preferences, regulatory
reforms, and the rise of sustainable investing. These shifts have had profound implications on
the mutual fund industry in India, where the market has experienced rapid growth.

Introduction management (AUM) in sustainable investments have
The global mutual fund industry has seen significant grown exponentially, particularly in Europe and North
transformation over the last decade, driven by various America. This trend is gaining momentum in India,
factors such as technological advancements, changing where several Asset Management Companies (AMCs)
investor preferences, regulatory reforms, and the rise of have launched ESG-focused funds. The integration of
sustainable investing. These shifts have had profound ESG criteria not only meets the demands of socially
implications on the mutual fund industry in India, where conscious investors but also aligns with the long-term
the market has experienced rapid growth. As India sustainability goals of companies.
integrates more closely with global markets, 2. Technological Disruption and Innovation: The
understanding the latest developments, trends, and mutual fund industry is leveraging technology like
challenges in the global mutual fund industry is essential never before. The adoption of artificial intelligence
for stakeholders. This article delves into these aspects, (AI), machine learning (ML), and big data analytics
providing insights into how the Indian market can align is transforming the way funds are managed and
itself with global best practices while addressing its distributed. Robo-advisors are making personalized
unique challenges. investment advice accessible to a broader audience,
while blockchain technology is enhancing
Global Trends in the Mutual Fund Industry transparency and reducing operational costs. In
1. Sustainable and Responsible Investing: Globally, India, the fintech revolution is driving digital
there is a growing emphasis on Environmental, Social, distribution channels, allowing for seamless
and Governance (ESG) factors as key criteria for investment processes and greater reach, especially
investment decisions. According to the Global in underpenetrated markets.
Sustainable Investment Alliance, assets under 3. Rise of Passive Investing: Passive investing,

28 | 2024 | SEPTEMBER | BANKING FINANCE