Will Paytm's foray into mutual funds shake up the industry?


One97 Communications, which owns Paytm, has got a SEBI approval to sell Mutual Funds direct plans. Paytm, which currently has 300+ million users will give the mutual fund industry a new boost. Right since demonetization, the mutual fund industry has seen a steep growth with record number of folios created which has lead to all time high net inflows.

In order to sell mutual funds, Paytm has created a new subsidiary 'Paytm Money', the launch date of the app is yet to be announced. Currently only 2% of India's population invests into mutual funds & this number is definitely going to increase once the new investment App is launched. By selling direct plans, paytm will not receive any commissions from the fund houses - Paytm is yet to declare the pricing plans for the new investment app.

Paytm also expects this would build up customer loyalty, with more & more customer's money parked onto their wallet, savings & investment platforms.

While this is a very positive news for the entire mutual fund industry & million of new investors would join the wealth creation platform, the fund houses will need to define a strategy on how to deploy the excess cash considering high valuations in the stock market.

Many investors latched onto mid & small cap space in the year 2017, which resulted in some of the funds like Reliance Small Cap Fund disabling lump-sum investments. This also exposes a risk of capital protection, where many new investors without direct knowledge of investment funds & horizon can expect very huge returns in short term & can bail out when they see their portfolio in the red. Learn how mutual funds make money - How does my investment grow in a mutual fund?

Whatever be the case, this opens up opportunity for other e-commerce players to roll out similar investment options, considering the huge potential.

We wish PayTm all the very best for this launch & we already know it is going to be a HUGE SUCCESS!!

Looking to make fresh investments? Best Mutual Funds to invest in 2018

Mutual funds as an investment instrument has been gaining popularity over the years, thanks to the wide range of options available and the ease of KYC process. To know more about them, check out The Mutual Funds Sahi Hai campaign, launched by The Association of Mutual Funds in India (AMFI) at www.mutualfundssahihai.com

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