Big draw for retail investors
As the equity markets hit new records, systematic investment plan (SIP) schemes continue to attract retail investors. SIPs are set to grow at double-digits and cross Rs 70,000 crore investments this year, say experts.
According to Association of Mutual Funds in India (Amfi), SIPs have emerged as a popular mode to invest in the mutual fund (MF) market. The total money garnered by fund houses through SIPs increased to Rs 59,000 crore in 2017 compared to about Rs 40,000 crore in 2016. In the last one month alone, the total investment into SIP was pegged at Rs 6,200 core, witnessing a surge of 56 per cent against last year.
“If you look at the opening rally this year, retail investors will continue to invest in the market via the SIP route. At this pace, the total investment via SIP will cross Rs 70,000 crore, even by the conservative estimation,” said A Balasubramanian, chairman, Amfi.
According to Nilesh Shah, MD at Kotak Mahindra Mutual Fund, the higher interest in SIPs could be attributed to robust performance of equity schemes combined with investors’ education.
“SIPs have been the preferred route for retail investors as the returns are high and at the same time, market risks are lower, compared to directly investing in equity markets. Also, for the salaried class, it is a more disciplined way of investing,” Shah added.
Overall, investors infused over Rs 2.3 lakh crore in MF schemes in 2017. According to Balasubramanian, poor returns in the traditional asset classes such as real estate and gold have also encouraged retail investors to shift to financial asset class like mutual fund.The benefit of investing periodically is there is not much burden on the investor. It is similar to a recurring deposit.
The industry added 9.2 lakh SIP accounts per month on an average, with an average size of over Rs 3,300 per account. Mutual funds have about 1.80 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes. The recent rally and the improvin g economic data are also adding to the confidence of investors.