Indians are reluctant to invest in mutual funds on fears of high risk and lack of information on how this investment product works, a report says.

Despite being available in the market for over two decades now with assets under management equalling Rs. 7,81,711.52 crore (as of February 28, 2010), less than 10 per cent Indian households have invested in mutual funds, according to the report by research and analytics firm Boston Analytics.

The report suggests that investors are holding back from putting their money in mutual funds due to perceived high risk and lack of information on how they work.

The report is based on a survey of approximately 10,000 respondents in 15 Indian cities as of March 2010.

Among respondents with high savings, close to 40 per cent of those who live in metros and Tier I cities said such investments were very risky, whereas 33 per cent of those in tier II cities said they did not know how and where to invest in such assets.

On the other hand, among nine out of ten who invested said they did so because they felt mutual funds were more professionally managed than other asset classes.

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