According to industry data from CAMS, top 26 mutual fund distributors (excluding banks) shows an increase of about 5 lakh new SIP accounts between April and August this year
With investors warming up to systematic investment plans (SIP) of mutual funds, where they invest a fixed amount monthly or quarterly over a period of time to reduce the cost of investment, stock brokers are going all-out to get new SIP accounts.
Many first time investors burn their fingers by directly investing in stocks, leaving them with a bad impression. Also, active stock picking requires time, effort and skill. In contrast, mutual funds are a nice package, with lower risk. This is where your neighbourhood stockbroker comes in.
According to industry data from CAMS, top 26 mutual fund distributors (excluding banks) shows an increase of about 5 lakh new SIP accounts between April and August this year. Leading the charts are NJ Invest (1,90,094), and Geojit BNP Paribas Financial Services (52,549).
Besides online-only MF platforms and offline distributors, in the past few months, large and traditional stockbroking companies are emerging as major players marketing SIPs. For retail investors like you and me, and households, pooling their savings in SIPs makes a lot more sense, than just direct stock investment/trading.
Satish Menon, executive director, Geojit BNP Paribas, says, "We started selling SIP of MF in a small way five years back and we have seen that all those clients who came through the SIP route are making money. This gave us the confidence to push this product aggressively. Among national distributors, we should have the highest growth in the SIP book. The number of live SIPs has also gone up.”
Menon says investors should realise they can make a sizeable corpus by following a disciplined and regular investment pattern like SIPs and realise their life values and goals.
Stock brokers are seeing a lot of interest. Geojit BNP Paribas used to handle a SIP book of Rs 19.48 crore in April 2016, which has grown 83% to almost Rs 36 crore by August. HDFC Securities has seen 60% growth with this figure rising from Rs 20.41 crore to Rs 32.65 crore in the same period. Motilal Oswal Securities has seen 52.8% growth, Reliance Securities witnessed 39.2% growth and Sharekhan saw 35.6% rise.
According to experts, one needs to invest a lump-sum in mutual funds. By staggering their investments over a large period, they can get better returns. "By investing in an equity mutual fund through SIP mode, the impact of market volatility gets minimised due to rupee cost average, helping the investor to get relatively higher returns," says HDFC Securities analyst Dhuraivel Gunasekaran in a report.
While the smallest SIPs are worth Rs 500 per month, as investors get comfortable, they can put more money via SIPs.
To start a SIP, investors can just make a few clicks and be an investor.
"We recognised the rising need shown by our clients to invest in mutual funds owing to volatile nature of the market in the short term and better than inflation returns of equities over the long term. We are seeing sustained interest in SIPs, both by existing and new customers on our online mutual fund platform, says R Kalyanaraman, senior vice president, Sharekhan.
Not just big cities, interest in SIP of mutual funds is also coming from smaller cities.
N K Prasad, president & CEO, CAMS said, "Investors at B15 cities too are adopting systematic investment habits and account for over 40% of new systematic registrations.”
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