Flashback 2001 — the US ‘64 scam had dented investors’ confidence and the Congress party, then in opposition, had asked for an explanation from the finance minister Yashwant Sinha. But, today all that the finance minister needs to do is ask the investors to stay invested for a long-term to get good returns. And indeed, MF investors are apparently paying heed to his suggestions.

Qamar Ahsan, 55, a Patna University professor says, “I have been investing in MFs for the past 20 years. As a teacher, my income is limited, so MFs have been safe instruments for me to let my money grow. I have invested in both balanced and special situation funds and, of course, in ELSS to save taxes. Over the years the schemes I have invested in have generated 15-16 per cent returns, so I think it is better to invest in MFs than investing in the government’s saving schemes.”

In 45 years of its existence, the mutual fund industry in India seems to have come a long way. From a one fund industry managing around Rs 7,000 crore 20 years ago, it has grown over 80 times to manage assets worth over Rs 5.6 lakh crore through 39 fund houses today. This would not have been possible without the participation of retail investors who have shown immense confidence in the industry. However, at times of acute volatility, the jitters inevitably get to the investors.

Amita Mahapatra, 45, a housewife in Jamshedpur who invested in LIC Growth fund and UTI Contra fund in 2004 was worried about the value of money she had invested. “I had bought units worth Rs 10,000 four years back. During market turbulence, I used to pray that the value should not fall below the purchase price,” she says. Did she think about shifting her equity exposure to debt? “I do not have a huge portfolio, so was less worried and mutual funds have been giving better returns. Also as a housewife I do not have to file I-T return, so I did not think on those lines,” she says.

Namit Gupta, 42, a media professional has been investing in mutual funds for saving taxes and he is not upset with the returns either. “A 30-35 per cent return on my investment isn’t bad,” he smiles. What was his response to the market movements affecting his portfolio? “I knew it would take a hit, but did not want to panic for two reasons — I am in it for at least 3-5 years and had bought most of my units when the Sensex was ruling at around 12,000 points.” That is another intelligent investor.

People from the industry have also given a thumbs-up to the risk-taking appetite of retail investors. However, they also have a word of caution. “Investors should not look at short-term gains in this market. The strategy should be ‘time-in’ the market rather than ‘timing’ the market. Fund managers should also not take undue risks for any near-term profits. If an investor stays in the market for 2-3 years he will surely gain from it,” says Vikrant Gugnani, CEO of Reliance Mutual Fund.

Rathi Arora, 34, a business manager based in Delhi seconds Gugnani’s views. “I am disturbed by the fall in the value of my portfolio, but I am looking at it as a long-term play so will stay put. I am going for a five-year horizon and equity has always delivered in that time frame.”

And it is not only investors in their 30s or 40s who have been taking the wise decision of investing in mutual funds, the younger generation is also looking at it as a safer bet to park their savings. Ashmeet Shahpuri, a 26-year-old consultant with an MNC who has been investing in equities regularly burnt his fingers in the recent market meltdown and shifted focus to MFs, however, the timing for that too wasn’t great. Shahpuri invested in five mutual fund schemes as a tax saving exercise in January when the Sensex was nearing 21,000 points.

“I invested what I thought was a good time to buy but since then I have been crying,” says Shahpuri. However, he does not have any plans to offload his holdings immediately. “I have notional losses of around Rs 30,000 from the MF schemes but as they are tax saving schemes, I can’t redeem them as I will lose the benefits, all that I can do is look at the NAV and cry.” Despite the volatility, he does not want to invest in PF or NSC “just because of the kind of gestation period they have and if I stay invested for 3 years, I expect to not only make good the losses but earn some profits too,” he smiles.

Investors are upbeat about the outlook for the industry, but the ball is now in the court of fund managers to live up to the expectations.