1 min read.Updated: 09 Jul 2021, 05:09 PM ISTNeil Borate
Investors have become cautious and are taking the SIP route rather than investing lump sums at this stage, considering the market rally that has happened
MUMBAI: The ratio of fresh SIP registrations to the closure of old SIPs saw a sharp rise in June, with a large number of new SIPs being registered. SIP stands for Systematic Investment Plan, a system of investing a fixed amount in a mutual fund every month. Data released by Amfi (Association of Mutual Funds in India) shows that 21.3 lakh fresh SIPs were launched compared to 7.63 lakh SIPs which indicates that for every SIP stopped almost 3 new SIPs were launched.
Monthly SIP contribution rose to ₹9,156 crore in June from ₹8,819 crore in May.
Indian equity markets have rallied strongly over the past year following a sharp dip in March 2020 due to the first wave of Covid 19. The Nifty is up 45.71%. However, with recovery in the real economy lagging behind and valuations looking stretched, investors have turned to SIPs in order to spread their bets say experts. In terms of net flows, Amfi data showed that 36% of the flows in equity mutual funds came from SIPs rather than lump sum investments.
"Investors have become cautious and are taking the SIP route rather than investing lump sums at this stage, considering the market rally that has happened. A lot of new investors have also come into mutual funds and they are testing the waters with small SIPs. In my own case I've seen major client addition in the past year or so," said Viral Bhatt, founder, Money Mantra, a Mumbai based mutual fund distributor.