Stock markets are expected to yield 15-20 per cent over the next 2 years

CEO, L&T Mutual Fund Sanjay Sinha feels that Dr Bimal Jalan Committee has not found favour with the larger audience and that some way has to be found out. In conversation with Ritu Kant Ojha of The Indian Express, Sinha says that reasonable investment in the yield fund for the medium to long term horizon may make sense because the yield once they start coming down, hold promise of not only reasonable return but carry the scope of capital appreciation also. ‘Due to the tight liquidity situation, the short term rate are also at attractive levels and therefore locking your investments into FMPs may make a good investment choice’ he says. Excerpts

Last 2 years have been tough for Mutual Fund industry. Still we are seing more and more new entrants into the AMC business. What is the reason? What makes it so lucrative?

The ban on the entry load may have an impact in the medium and it is already showing in the growth of the industry in last 1 year. Mutual Funds as an investmetn product are one of the most cost effective vehicle for long term financial planning. This inherent virtue is slowly donning to a large universe of investors and we have therefore seen the number of SIPs growing from 30 lakhs in 2008 to 50 lakhs in 2010. This is a structural transformation and is expected to put the industry on a stronger foundation and is therefore likely to retain as well as attract the attention of those players who have a long term vision for the industry. But the challenge of distribution in the new environment has to be tackeled and the soluction will evolve over the next few months.

Source: http://www.indianexpress.com/news/stock-markets-are-expected-to-yield-1520-per-cent-over-the-next-2-years/729580/0