New Delhi: Retail investors are preferring systematic investment plan (SIP) option for investing in mutual funds as the industry garnered over Rs6,200 crore through this route in December, a surge of 56% from the year-ago period.
The total money garnered by fund houses through SIPs increased to over Rs59,000 crore in 2017 as compared to about Rs40,000 crore in 2016, Association of Mutual Funds in India (Amfi) data showed. The higher interest in SIPs could be attributed to robust performance of equity schemes and investor education initiatives taken by industry body Amfi, Kotak Mahindra Mutual Fund Managing Director Nilesh Shah said.
SIPs have been the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk, he added. “SIP has been gaining favour with mutual fund (MF) investors, as it assist in rupee cost averaging and also in investing in a disciplined manner without bothering about market volatility," Amfi Chairman A Balasubramanian said.
Further, he said that investors are no more interested in buying into traditional asset classes such as real estate and gold, thus moving to financial asset class like mutual fund. 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 Rs6,222 crore last month through SIPs as against Rs3,973 crore collected in December 2016.
Overall, investors infused over Rs2.3 lakh crore in mutual fund schemes in 2017. And more than Rs59,000 crore invested through SIPs alone. The industry added over 9.2 lakh SIP accounts each month on an average, with an average size of over Rs3,300 per account.
Currently, mutual funds have nearly 2 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes. Going ahead, ICICI Prudential Mutual Fund Managing Director and Chief Executive Nimesh Shah believes that SIP culture is likely to continue and entrench in the mutual fund investment landscape.
“Owing to this we expect the inflows to be sticky in nature. Of late, whenever the market has been volatile, we have observed that investors have made incremental purchases rather than opting to redeem, which is a heartening development," he added.