The nascent mutual fund industry in India is poised for tremendous growth averaging 29% a year over the next five years, Celent predicts. Driving the growth will be low retail penetration, high household savings rate and increasing interest among foreign asset managers to serve the market.

Retail investors will drive sales, with this segment of the market growing at an annual rate of 35%, whereas the institutional segment will grow 25% a year, Celent said.

In the past five years, the annual compound annual growth rate of the industry has been 25%, Celent said. Nonetheless, profitability will remain at the same level as firms need to develop additional distribution channels and competition among mutual fund complexes heats up, Celent said.

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