Mutual funds best choice for retail investment but avoid thematic funds: BSE chief

Retail investors who lack technical knowledge of the stock market should consider mutual funds as the best investment option, according to S Ramamurthy, CEO and MD of BSE. He made the remarks during a discussion with members of the Calcutta Chamber of Commerce on Thursday, as reported by TOI.

Ramamurthy suggested that small investors without market expertise should consider index funds and broad-based funds or large cap funds to spread risk within the mutual fund space, while avoiding thematic funds

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Ramamurthy emphasized the importance of investor awareness and responsibility. He cautioned that regulations alone cannot protect investors who do not take adequate precautions. "You trade what you understand, and you understand what you trade – if you don't do that, you have a problem," Ramamurthy said, urging investors to be vigilant and informed.

He also criticized investors who rely on rumors instead of conducting their own research. "You scan a vegetable before you buy it, but when you invest your life's earnings, you go by hearsay – that's not how it should be," he stated.

For small investors without market expertise, Ramamurthy recommended investing in mutual funds, specifically broad-based or large-cap funds to spread risk, while avoiding thematic funds. He also encouraged women and young people to start investing early.

He advised that SME IPOs and stocks are not suitable for retail investors, noting that there are many good stocks available for them in the main market. He also encouraged women and young people to start investing early in their careers.

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Highlighting the potential of India's SME sector, Ramamurthy mentioned that only about 40 companies from this sector are listed on the stock exchange, while the potential could be over 1,000. He encouraged more small and medium enterprises to consider listing as a way to raise funds and expand their businesses.