Systematic Investment Plan

Systematic Investment Plan

Systematic Investment Plan

Inflows in the mutual fund industry through systematic investment plans or SIPs reached close to Rs 67,000 crore in the first seven months of the ongoing fiscal, suggesting the growing popularity of the route for investment among retail investors. This comes following an inflow of Rs 96,080 crore through the route in 2020-21, data with the Association of Mutual Funds in India (Amfi) showed.

  • The contribution to Mutual fund SIP has gone up more than two-fold during the last five years which was at Rs 43,921 crore during 2016-17.
  • Further, SIPs’ assets under management (AUM) climbed to Rs 5.53 lakh crore at the end of October from Rs 4.28 lakh crore in March-end.
  • Over the past five years, SIP AUM has grown 30 per cent annually, twice as fast as the growth in the overall mutual fund industry’s assets base.
  • Moreso, the number of new SIPs registered was 23.83 lakh in October. Total registrations reached 1.5 crore in the first seven months (April-October) of the current fiscal 2021-22. This was way higher than the 1.41 crore new SIP registrations in the entire preceding financial year.
  • Presently, mutual funds have about 4.64 crore SIP accounts through which investors regularly invest in mutual fund schemes.
  • An executive of Research at Investica adds that staggered investment approach (via SIP or STP) in equity markets seems the ultimate solution to ride the wave of uncertainty as corrections would bring down the average cost of your total investments or in case the bull run continues, investors would not lose out on opportunity cost.
  • SIP is an investment methodology offered by mutual funds wherein an individual saver can invest a fixed amount in a chosen scheme periodically at fixed intervals — say once a month, instead of making a lump-sum investment. The SIP installment amount can be as small as Rs 500 per month.
  • According to Amfi, SIPs have been gaining popularity among Indian savers, as it helps in rupee cost averaging and investing in a disciplined manner without worrying about market volatility or timing the market.
  • The 45-player mutual fund industry mainly depends on SIPs for inflows, with equity mutual funds attracting Rs 5,215 crore in October, making it the eighth consecutive monthly infusion. However, the quantum of net inflows dropped from Rs 8,677 crore logged in September.
  • The co-founder of MyWealthGrowth.com, adds that subscriptions in equity funds were lower compared to September as markets were a bit volatile in October and investors may have followed a wait and watch or staggered investing approach which is better in current market conditions. He further clarifies that there is a possibility that some of the outflows from these funds would have gone back to International Funds and Balanced Funds launched during recent times.

The debt segment saw net inflows to the tune of Rs 12,984 crore last month, after seeing a net withdrawal of Rs 63,910 crore in September.

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