TEHRAN- It’s over two years that stock market in Iran has been playing an outstanding role in the attraction of the people’s investment.

Iranian people, who used to invest their money in some traditional ways such as buying gold, or deposit money in the banks, have taken a new approach for investment over the past two years, as they have been investing more and more in the stock market.

The rising number of new shareholders in Tehran Stock Exchange (TSE), which is Iran’s major stock exchange, is an indication of this new approach.

Different factors have created such condition, among them it could be referred to the efforts made by the stock market to attract people’s more investment through laying the proper ground, for example via introducing new financial instruments, and also by making people more acquainted with this market.

The other factor is the government’s policy and new approach toward the stock market, and putting emphasis on this market’s role in funding and economic growth.

The status of the parallel markets such as forex, housing, and gold markets has also made stock market a more attractive place for the people to invest in.

Meanwhile, the government’s policy of lowering the interest rate of the bank deposits has redirected a huge amount of people’s investment to the stock market.

In a recent interview, a director in Iran Securities and Exchange Organization (SEO) has announced that the fixed income funds have lagged the banks behind in attracting the people’s investment.

Saying that the risk of investing in the fixed income funds is very low and these funds now pay regular returns to investors at good rates, Meysam Fadaei, the SEO’s director for supervising the financial entities, underlined that these funds are one of the largest mutual funds that have been welcomed by the people, and some of them have even grown more than some banks and attracted more capital.

“Now, for example, one of the fixed income funds has succeeded in attracting people’s investment three times more than a private bank (Middle East Bank) and another fund twice as much as another private bank (Post Bank)”, he stated.

Announcing that over 5.3 quadrillion rials (about $126.19 billion) has been already attracted by the mutual funds, Fadaei said that the fixed income funds, which pay more interest than banks, account for attracting 3.7 quadrillion rials (about $88.095 billion) of the mentioned figure.

Apart from fixed income funds, the stock market also has commodity funds, which now hold 26 trillion rials (about $619 million), and about 95 percent of this figure belongs to the gold fund, which can be a suitable and good alternative for investing in the gold market.

Fadaei called equity funds among other indirect investment funds in the stock market and said that these funds are composed of shares of several different companies that have less risk than direct investment in shares of one company.

In Iran, traditional methods of investing, especially in the form of bank deposits, are very popular. However, traditional methods of investment for reasons such as legal restrictions on banks, the expansion of the banking structure and the bureaucracy that governs it, cannot meet the new type of investment needs in various economic sectors.

The depositors of the banks are practically facing limitations in choosing the type of investment, in fact, the investment path in banks makes it impossible for the person who intends to invest to choose the return on investment based on the accepted risk.

Naturally, investors in this situation are looking for alternative ways that can play a greater role in choosing the place of investment and define the desired risk for their investment in proportion to their degree of risk taking.

Mutual funds are a good option for this group of investors who tend to be more involved in choosing the type and risk of their investment than traditional methods.

In addition, fixed income funds can greatly reduce investment risk.