Retail investors are preferring systematic investment plan (SIP) option for investing in mutual funds, with the industry garnering around Rs 5,900 crore through the route in November, an increase of 52 per cent from the year-ago period.
Retail investors are preferring systematic investment plan (SIP) option for investing in mutual funds, with the industry garnering around Rs 5,900 crore through the route in November, an increase of 52 per cent from the year-ago period. With this, the total money garnered by fund houses through SIPs has touched Rs 40,780 crore in the first eight months of the current fiscal, according to the Association of Mutual Funds in India (Amfi) data. In comparison, Rs 27,468 crore was collected through the investment plan in April-November 2016-17. The increased interest in SIPs can be attributed to strong performance of equity schemes and investor education initiated by Amfi and mutual fund houses, Bajaj Capital CEO Rahul Parikh said. SIPs have been the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk.
“SIP has been gaining popularity among MF investors, as it helps in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market,” Amfi noted. It is an investment vehicle that allows investors to invest in small amount periodically instead of lumpsum. The frequency of investment is usually weekly, monthly or quarterly.
It is similar to a recurring deposit where investors deposit a small or fixed amount every month. As per the latest data, the industry garnered about Rs 5,893 crore last month through SIPs against Rs 3,884 crore collected in November 2016. In October this year, Rs 5,621 crore was collected. The industry added about 9 lakh SIP accounts each month on an average during the ongoing fiscal, with an average SIP size of about Rs 3,250 per SIP account. Currently, mutual funds have about 1.8 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes.