{"id":4672,"date":"2022-03-18T11:00:00","date_gmt":"2022-03-18T05:30:00","guid":{"rendered":"https:\/\/appreciatewealth.com\/blog\/?p=1875"},"modified":"2025-06-27T18:34:50","modified_gmt":"2025-06-27T13:04:50","slug":"how-mutual-fund-industry-responded-to-covid-19-financial-goals","status":"publish","type":"post","link":"https:\/\/appreciatewealth.com\/blog\/how-mutual-fund-industry-responded-to-covid-19-financial-goals","title":{"rendered":"How Mutual Fund Industry Responded To COVID-19 | Financial Goals"},"content":{"rendered":"\n<p>Mutual funds, as an investment option, have been a winner with Indian investors for sometime now. Increasingly, Indian investors have been realizing the role of mutual fund investments in meeting their financial goals.&nbsp;<\/p>\n\n\n\n<p>Since the COVID-19 pandemic broke out, however, the markets have seen some shifts in investment behaviour. In this piece, let\u2019s explore how the mutual fund industry has been doing in this new normal.&nbsp;<\/p>\n\n\n\n<p><strong>New fund offers<\/strong><\/p>\n\n\n\n<p>When a new fund is launched, its first subscription offered by the company is called New Fund Offer (NFO). Think of it as getting the tickets for the premiere of a new film. There\u2019s a red carpet and everyone has their eyes out for it &#8211; celebrities, media houses, directors, and film buffs.&nbsp;<\/p>\n\n\n\n<p>At the start of 2020, there were seven NFOs in January and eleven in February. After the pandemic broke out, this number reduced to four in March and none at all in April. This drastic decrease in fund houses wanting to register funds with SEBI was a direct response to COVID-19.&nbsp;<\/p>\n\n\n\n<p>But the markets always bounce back. In May 2020, three NFOs were out and mutual funds have been picking up ever since then. In 2021, there were around 16 NFOs.&nbsp;<\/p>\n\n\n\n<p><strong>Composition of mutual funds<\/strong><\/p>\n\n\n\n<p>Broadly, mutual funds can be categorized into equity, debt, and liquid mutual funds. Equity mutual funds are seen as the category with the greatest risk but they also come with the probability of the biggest returns. Investors typically decide which category of funds to invest in depending on their risk appetite and financial goals.<\/p>\n\n\n\n<p>Your risk appetite depends upon your age, income, number of dependents, existing debt, and personality. Since the pandemic broke out, the risk appetite of investors has reduced, and understandably so. There\u2019s been a looming uncertainty regarding job stability, pay cuts, and more.&nbsp;<\/p>\n\n\n\n<p>Hence, the composition of equity mutual funds has declined in comparison to 2019. In December 2019, equity-oriented funds were 42.30%, whereas, in April 2020, they stood at 38.80%. Considering all the ambiguity in the world right now, many investors are leaning towards investments with a lower risk component.&nbsp;<\/p>\n\n\n\n<p><strong>Competition from new products<\/strong><\/p>\n\n\n\n<p>When it comes to investing, you are spoilt for choice. It\u2019s much like entering Starbucks &#8211; so many milk types, creams, syrups, toppings, and espresso shots to choose from! In the world of investing, there are some classic asset classes such as gold, shares, and real estate. Mutual funds gained popularity only over the last few years.&nbsp;<\/p>\n\n\n\n<p>However, due to COVID-19, the Indian mutual fund industry saw a <a href=\"https:\/\/www.livemint.com\/mutual-fund\/mf-news\/sip-collections-drop-to-96-000-cr-in-fy21-amid-pandemic-led-disruptions-11618403035656.html\">drop of 4%,<\/a> amounting to about \u20b996,000 crore, in its SIP collections in the financial year 2020-2021. This downward shift has mainly been due to the income uncertainty induced by the pandemic.&nbsp;<\/p>\n\n\n\n<p><a href=\"https:\/\/www.pwc.com\/us\/en\/industries\/financial-services\/library\/mutual-fund-outlook.html\">As per PWC<\/a>, about 15% of existing mutual funds are expected to be closed by the year 2025. New products, such as ETFs, are expected to partially offset this. While this may be a prediction for the US, the Indian economy may see similar changes in this decade.&nbsp;<\/p>\n\n\n\n<p>So, it may be wise for investors to start exploring new investment products and review and rebalance their portfolio. This is because asset allocation done well helps meet financial goals as planned. Your financial goals may be fixed but the investments that help you meet them are not.&nbsp;<\/p>\n\n\n\n<p><strong>The mutual fund industry will continue to grow&nbsp;<\/strong><\/p>\n\n\n\n<p>The mutual fund industry will continue to grow in India despite the temporary impact of the pandemic. This is because the penetration of mutual funds in India is significantly lower compared to other economies to begin with.<\/p>\n\n\n\n<p><br>However, COVID-19 has highlighted the need to diversify by investing in several asset classes. Mutual funds, while a good investment choice, should be considered to be branched out from in the post-pandemic world. There may be better, more promising investment products awaiting you. To understand more about whether you should or should not invest in mutual funds, <a href=\"https:\/\/appreciatewealth.com\/blog\/mutual-fund-investment-101-know-the-what-how-and-why-of-this-investment-route\">read this<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Mutual funds, as an investment option, have been a winner with Indian investors for sometime now. Increasingly, Indian investors have been realizing the role of mutual fund investments in meeting their financial goals.&nbsp; Since the COVID-19 pandemic broke out, however, the markets have seen some shifts in investment behaviour. In this piece, let\u2019s explore how &hellip;<\/p>\n<p class=\"read-more\"> <a class=\"\" href=\"https:\/\/appreciatewealth.com\/blog\/how-mutual-fund-industry-responded-to-covid-19-financial-goals\"> <span class=\"screen-reader-text\">How Mutual Fund Industry Responded To COVID-19 | Financial Goals<\/span> Read More \u00bb<\/a><\/p>\n","protected":false},"author":8,"featured_media":4658,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"","footnotes":""},"categories":[16],"tags":[],"class_list":["post-4672","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment-assets"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>How Mutual Fund Industry Responded To COVID-19 | Financial Goals - appreciate<\/title>\n<meta name=\"description\" content=\"Discover the impact of COVID-19 on the mutual fund industry. Mutual fund investment is a unique option to meet the financial goals. Contact us now!\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/appreciatewealth.com\/blog\/how-mutual-fund-industry-responded-to-covid-19-financial-goals\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How Mutual Fund Industry Responded To COVID-19 | Financial Goals - appreciate\" \/>\n<meta property=\"og:description\" content=\"Discover the impact of COVID-19 on the mutual fund industry. Mutual fund investment is a unique option to meet the financial goals. 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