1. Brokerages strike it big on SIP distribution

Brokerages strike it big on SIP distribution

With more and more retail investors getting inclined to the systematic investment plans (SIPs) to park their funds, brokerages are going all-out to attract investors.

By: | Mumbai | Published: November 3, 2016 1:53 PM
Retail investors who are not in a position to make direct bulk investments in the stock markets are increasingly attracted to SIP which requires only small amounts. (Reuters) Retail investors who are not in a position to make direct bulk investments in the stock markets are increasingly attracted to SIP which requires only small amounts. (Reuters)

With more and more retail investors getting inclined to the systematic investment plans (SIPs) to park their funds, brokerages are going all-out to attract investors.

As a result, a number of traditional brokerages such as like Geojit, Motilal Oswal, and HDFC Securities among others are aggressively chasing investors as they clock big strides in the distribution of this investment tool, if the industry data is any indication.

According to the industry data from CAMS, for the first five months of the current fiscal year, top 26 mutual fund distributors (excluding banks) together added around five lakh new SIP accounts during the period as the total number of live SIPs rose over 11 per cent.

Distributors like Geojit BNP Paribas Financial Services, HDFC Securities, Motilal Oswal Securities, Reliance Securities and Sharekhan, which are traditionally better known for their retail broking businesses, are now among the leaders in attracting new SIPs.

The Kochi-based Geojit with fresh SIP accounts worth Rs 16 crore registered a whopping 83.8 per cent growth during this period, making it the fastest growing player going by value of sales. The total investment through SIP route cumulatively by brokerages stood at Rs 644.9 crore as against Rs 550.84 crore, registering a growth of 17 per cent between April and August.

Going by the numbers of the accounts, it increased from 21.15 lakh to 23.99 lakh during the period, as per the CAMS data. These 26 distributors together account for over 90 per cent of the business in the segment.

“Retail investors who are not in a position to make direct bulk investments in the stock markets are increasingly attracted to SIP which requires only small amounts. By investing in SIPs, the investor averages the cost of her purchases, which points to the reason for this rising demand,” Geojit BNP Paribas executive director Satish Menon told PTI.

Mumbai-based HDFC Securities came second with a growth of 60 per cent during the period, as their SIP book increased from Rs 20.41 crore to Rs 32.65 crore, while Motilal Oswal grew at 50 per cent with their book increasing from Rs 6.81 crore to Rs 10.4 crore.

NJ India Invest, the top player in the segment, expanded its SIP book from Rs 325.39 crore to Rs 364.64 crore, registering 12 per cent growth. Out of these 26 players, as many as 12 recorded a double-digit growth during the period under review.

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