India stock funds seen $500bln by '17-Morgan Stanley

MUMBAI Aug 27 (Reuters) - Morgan Stanley (MS.N) said on Wednesday equity assets managed by Indian mutual funds would surge nearly 14 times to $500 billion by 2017 as a wealthier and growing younger population becomes more willing to take on risks.

Equity assets in India now stand at nearly 1.6 trillion rupees ($37 billion), data from the Association of Mutual Funds in India (AMFI) showed.

The U.S. investment bank said in a report India's annual financial savings pool would nearly quadruple to 28.64 trillion rupees in the next 10 years, with equity instruments growing seven times to 3.24 trillion rupees.

Equity assets, the most profitable and earning a fee of about 1 percent for fund houses, rose eight-and-a-half times to more than 2 trillion rupees in the five years ended 2007, AMFI data showed.

The assets have slumped by a fourth this year as a 30 percent tumble in the main BSE share index .BSESN this year hit portfolio values and dented inflows. ($1=43.7 rupees) (Reporting by Nishant Kumar; Editing by Ranjit Gangadharan)