Retail investors are increasingly opting for systematic investment plans (SIPs) in mutual funds as the industry garnered over Rs 7,600 crore through this route in August, a surge of 47 per cent from the year-ago period.
Mutual funds garner 7,600 cr via systematic investment plans
SIPs have been the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk. Further, investors are not showing interest in traditional asset classes like real estate and gold, and are preferring financial assets such as mutual funds. “While SIP remains a popular mode of investment, there is need for investor awareness on the advantages of SIP, especially in volatile markets.
There are emerging challenges in this space such as premature cancellations of SIP instructions as investors rush to discontinue their SIPs in a falling market,” said Stefan Groening, Director — Investment Solutions, Sharekhan, BNP Paribas.
As per the latest data, SIP contribution in August was Rs 7,658 crore, a little higher than Rs 7,554 crore seen in the preceding month. In comparison, the industry garnered Rs 5,206 crore in August last year and Rs 3,496 crore in August 2016.
MFs have 2.38 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes. In the current fiscal, over 10 lakh SIP accounts were added each month on an average, with an average ticket size of Rs 3,200.
SIP is an investment vehicle that allows investors to invest in small amount periodically instead of a lumpsum 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.