Mutual fund industry managed to garner Rs 7,727 crore through systematic investment plans (SIPs) in September, a surge of 40 per cent from the year-ago period, despite corrections in equity market.
Mutual fund industry managed to garner Rs 7,727 crore through systematic investment plans (SIPs) in September, a surge of 40 per cent from the year-ago period, despite corrections in equity market. With this, total SIP contribution in the first half of the current fiscal rose to Rs 44,487 crore, compared to Rs 29,266 crore in April-September 2017, as per the Association of Mutual Funds in India (AMFI).
SIP continued to be the preferred route for retail investors to invest in mutual fund as it helps them reduce market timing risk, the industry body noted. As per the latest data, the SIP contribution in September stood at Rs 7,727 crore, which was 40 per cent higher than Rs 5,516 crore clocked in the same month last year.
In August, the industry collected Rs 7,658 crore and Rs 7,554 crore each in June and July. The pace of growth in fresh SIPs has slowed over the last three months as the SIP book grew by a little over 2 per cent in this period.
A sharp plunge of more than six per cent in 30-share Sensex last month, triggered by the IL&FS crisis, fall in the rupee and boiling crude oil prices, could be the reason for this pace.
However, over the past few years, investment through SIPs has been rising as investments of over Rs 67,000 crore through the mode were seen in 2017-18 and more than Rs 43,900 crore in the preceding fiscal.
“There is a healthy trend and SIPs have seen growth from strength to strength surviving markets volatility. This a good way for retail investors to manage market’s ups and downs and it’s encouraging that this trend continues,” Edelweiss Asset Management Company Chief Executive Radhika Gupta said.
According to Morningstar Director – Manager Research Kaustubh Belapurkar, Indian investors are increasingly showing signs of maturity by recognising the fact that equity is a long term asset class and volatility is a part of the journey. Investors are in fact using market dips to top up their investments.
“We are witnessing a trend of increasing SIP numbers as industry efforts towards investor education is getting more investors under the fold, who are acknowledging the power of the long-term wealth creation potential offered by equity investing,” he added.
Adhil Shetty, CEO of BankBazaar.com, believes that it is the right time to continue with SIPs in equity funds rather than redeem investments. It gives investor a chance to add higher number of units in their portfolio.
“This surge in investment points towards an increase in investor awareness about SIP, which is a good sign for the industry,” he added.
Currently, mutual funds have 2.44 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes. In the current fiscal, the industry has added 10.17 lakh SIP accounts each month on an average, with average ticket size of Rs 3,165.
SIP is an investment vehicle that allows investors to invest in small amount periodically instead of lump sum payment. 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. PTI