Last month, I wrote about how a new age has dawned in mutual-fund investing. At long last, investors have started investing steadily, mostly through SIPs, and regardless of market conditions. However, the winds of change actually run deeper than just that. There are fundamental changes afoot in the entire ecosystem of investing.
The interesting thing is that the big thrust of changes have been coming from - and will keep coming from - a change in the investing environment as well as from actual investments. No surprise, the source of the biggest set of changes is the same as that of so many other goods and services that you consume: the internet and pervasive computing. There are many parts to this puzzle and while many of them have existed for a long time, they have all started coming together and functioning in a connected manner only now.
The internal information handling of banks, registrars, mutual funds as well as information and research providers like Value Research has been operating in the digital realm for a long time. However, now these systems as well as the all-pervasive computing platform in your hand can communicate seamlessly. This gives you the ability to absorb information on a media website, make the decision to invest, click your way to a mutual fund's system onto a connected KYC system and then to your bank, and thus invest and move back to analyse your portfolio on Value Research Online, which has updated automatically. This system is yet not complete and there are still gaping holes where the network breaks and you are flung back into the slow, inefficient and costly world of physical interactions, but over the next year or two, it will all fall into place.
Connected to this, and facilitated by this, is a deeper change that is taking place. Finally, the shift away from physical investments and towards financial assets is visible. The prime drivers for this have been the terrible experiences that investors have had with gold and real estate, the two main physical assets, over the last half decade. In real estate, enough investors have finally realised that the old days, when you could buy any old piece of land and eventually make some money, are gone forever. And in gold, as you can read in this time's cover story, something fundamental has changed as well. The uselessness of gold and real estate as investments, something that I've been writing about for years, is now widely recognised even among Indian savers.
Not only have financial assets come to the fore, even within those, there is a sharply increased role of equity mutual funds. We are in the midst of a revolution in equity-fund investing. According to a study that we did recently at Value Research, this year until September, there were more than `1 lakh crore of net inflows into equity funds. This is double that of the previous one-year record, which was at the height of the 2007-08 frenzy. Such huge and steady retail equity inflows when there's no great bull run show a fundamental shift.
There are now one crore active SIPs in this country. In the coming years, as people see the returns from this kind of investing, there will be an exponential growth in mutual-fund investing as well as the quality of the experience that investors have. In every way, we are looking ahead to great times.
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