Recently I had a chance to meet some of my friends who have moved out from main stream full-time jobs and working on part time basis, or on the verge of taking partial retirement.
One thing which emerged from such discussions is that, most of them prefer direct equity compared to MF(s). Their thought process is that, most of the time, MF returns are 8%-11% only based on their investment time period. This does not make much meaning to some of them since post tax returns are even less. So they consider investing in stocks as better option.
Also, there is general belief that, Real estate and other products should be also considered for child education and retirement. So shifting from this mind set is going to take some time in Indian context. Though we can see that, AUM of MF industry is growing rapidly, I think, it is concentrated among few investors only. Many people still prefer real estate as their first choice of investment and this trend is going to remain.
Considering all this, and also the slow growth of per capita GDP, I believe that, returns from stocks like HDFC AMC would be limited as compared to some other industries.
I may be wrong in my observations and things could be completely different actually.
Disc : Invested in HDFC AMC.
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