Though there has been growing awareness about mutual funds in the past few years, mutual funds have been around in India since 1963. For a long period of time, mutual funds were offered only by Unit Trust of India. In the late 80s some public sector banks and insurance companies started offering mutual funds. The early 90s marked the entry of private sector mutual funds. Today there are 44 asset management companies offering mutual fund products. There are essentially two kinds of mutual funds.

• Open Ended Schemes: Investors can buy units of open ended schemes at any time. Investors can also sell units of open ended schemes at any time, though some schemes (e.g. equity linked savings schemes) may have a lock in period during which the investor cannot sell the units.


• Close Ended Schemes: Close ended schemes are open for subscription only for a limited period of time, during the offer period. These schemes have fixed tenure and the investors can sell or redeem only after the maturity of the scheme. Upon maturity, depending on the scheme, the units get automatically redeemed or in some cases, the investors can switch to a different scheme.

Mutual fund industry in India is highly regulated under the watch of the securities market regulator, Securities and Exchange Board of India (SEBI). If investors have any complaints they can register them with SEBI, who will ensure appropriate action is taken for redressal.