Mutual funds have become the preferred mode of investment for those who are buying equities from the stock market. They find it less risky to go through the route of mutual funds.

Mehrotra, who was here to inaugurate the new office of the company, said equity funds have emerged as the best option for the long-term investors in the current situation when the interest rates are expected to rise. "We have given an average return of 25 percent for equity funds over a period of 10 years."

Ideally, the investment in equity should be stretched between a five- and ten-year period to overcome any volatility. "The assets under equity funds may grow faster than inflation, which may stabilise just over six per cent," he said.

The growth of MFs is no longer centered around the major metros, it is moving out to second line of metros which includes Kochi as well. He expects the small investors to come for mutual funds in the future. "Their first preference would be small savings scheme, bonds and post office savings. But these schemes are not giving interest according to the current market rates," he said.

NRI investors may also be attracted to mutual funds more with the removal of tax exemption for the deposits come into effect. He felt mutual funds are a better option than gold or real estate. "Gold has had a good run while investors dabbling in real estate would find themselves at the wrong end of the current boom."

After eight years of operation in India, Franklin Templeton has Rs 18,000-crore assets with it, of which just under one percent will be from Kerala. Out of its total nine lakh customers, Kerala accounting for 19,000. In Kerala, the company is going for a greater retail presence through investor education.