NEW DELHI: At a time when markets are characterised by volatile movement and investors giving second thoughts to mutual funds, Systematic Investment Plans (SIPs) remain a preferred route for retail investors to invest in mutual fund and are driving growth in the industry.
Mutual fund industry garnered Rs 7,727 crore through SIPs in September, a surge of 40 per cent from the year-ago period, as per the Association of Mutual Funds in India.
Experts believe SIPs’ feature to mitigate risk will continue to attract investors who believe in long term equity gain. “For a buyer of the market, SIPs give a chance to correct investment if you got it wrong for the first time, a feature which is not available when you make lump-sum investment,” Integra Profit Founding CEO Tarun Vohra told TNIE.
Over the past few years, investment through SIPs has been rising as investments of over Rs 67,000 crore were seen in 2017-18 and more than Rs 43,900 crore in the preceding fiscal.
At present, mutual funds have 2.44 crore SIP accounts through which investors regularly invest in mutual fund schemes. In the current fiscal, the industry has added 10.17 lakh SIP accounts each month on an average, with average ticket size of Rs 3,165.
“There is a healthy trend and SIPs have seen growth from strength to strength, surviving markets volatility. This is a good way for retail investors to manage market’s ups and downs. It’s encouraging that this trend continues,” Edelweiss Asset Management Company Chief Executive Radhika Gupta said.
However, the fall of more than 6 per cent in 30-share Sensex last month, triggered by the IL&FS crisis, rupee depreciation and rising crude prices have slowed down the pace of SIP growth.
Experts, however, say SIPs provide a good opportunity to buyers when the market is bearish. BankBazaar.com CEO Adhil Shetty said it is the right time to continue with SIPs in equity funds, rather than redeeming investments. It gives investor a chance to add higher number of units in
their portfolio.
“This surge in investment points towards an increase in investor awareness about SIP, which is a good sign for the industry,” he said.