Thus dependency to meet domestic capital requirements is increased and foreign capital is sought, either in the form of investment or debt. While the governments manage various instruments to attract higher savings, the tendency of domestic savings remains comparatively low. In this wake, private savings/investment instruments are welcomed by savers of capital, both firms and households.
Mutual funds collect savings from households and firms, park these savings into various combinations of equity and money markets, and pass on the returns to their subscribers while retaining an investment management fee. The presence of mutual funds should have a positive effect on savings as they are private player in the market of investment management, and thus provide alternative platforms for savings. To what extent, it has actually happened, particularly at individual level? Are there any linkages between the growth in the mutual fund and growth in the real private sector? This report attempts to answer similar important questions.
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