Paytm Money to get first time investors from Indian small towns into mutual funds; industry cheers

Paytm’s investment platform Paytm Money will likely help small town people get on board the mutual fund bandwagon, and further boost inflows for the asset management industry already flourishing due to shifting habits towards financialisation of savings. Paytm Money is looking to garner huge traction from the hinterlands by making it easier to invest, where mutual fund penetration is currently low, say experts.

“Paytm money is an excellent step towards ease of investing in MFs. The reach of Paytm in the hinterlands of India will help masses to enter the world of MFs and create long term wealth,” Radhika Gupta, CEO, Edelweiss Asset Management, told FE Online.

Mutual fund inflows have surged of late, with the total assets under management recently crossing a whopping Rs 25 lakh crore, helped by an increase in investments into liquid funds. Investors’ interest in mutual funds saw a sharp rise after Prime Minister Narendra Modi’s demonetisation, coupled with other curbs on black money, narrowed investment avenues.

With Paytm Money, the mutual fund industry may expect even more inflows as the much talked about app is expected to bring first time investors from the hinterlands into the fold. “Paytm will get in first time investors into mutual funds,” Radhika Gupta said, adding in the same sentence: “and it will also be important to advise these investors in a right way and hand hold them.” Advisors will have an important role to play in guiding such investors, she pointed out, adding, “I urge all new investors to seek advice before they invest.”

Moreover, investors on Paytm Money platform may also benefit from usually higher returns given by direct plans offered here, as opposed to regular mutual fund options. This could also provide a fillip to direct mutual fund plans, where traditionally the penetration has remained very low at 14% of overall industry AUM (assets under management).

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