There is lot of investment avenues available today to an investor. In the financial market an investor with an investible surplus can deposit in bank, corporate debentures and bonds where there is low risk and low return. He may invest in stock of companies where the risk is high and return is also proportionately high. The recent trend in stock market has shown that an average retail investor always lost with periodic bearish trends. People began opting for portfolio managers with expertise in stock market who would invest on their behalf. Thus we have wealth management services provided by many institutions. However, they are proved to be very costly for a small investor. These investors have found a good shelter with the mutual funds. Mutual fund industry has seen a lot of changes in the past few years with multi national companies coming into the country; bring in their professional expertise in managing funds worldwide. In the past few months there has been a consolidation phase going on mutual fund industry in India. Now investors have a wide range on schemes to choose from depending on their individual profile. In this current paper we are going to analyze the role of mutual funds in the current scenario and its challenges in the next generation. Methodology: On the secondary data we are analyzing the contributions of mutual funds to an economy and its challenges in the next generation.
