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Rise in fresh SIPs shows the pull of equity
While equity mutual funds have been thirsting for big money over the past year, retail investors have been increasingly opting for regular monthly investments in these funds to build their equity portfolios.
Updated : Mar 17, 2018, 05:23 AM IST
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Nothing quite quenches as a SIP of equity mutual funds. Or, does it? Just ask the man on the street.
While equity mutual funds have been thirsting for big money over the past year, retail investors have been increasingly opting for regular monthly investments in these funds to build their equity portfolios.
According to numbers from Computer Age Management Services (CAMS), one of the registrars, the number of fresh systematic investment plans (SIPs), wherein a fixed sum is invested each month, has shot up by more than 45% between June 2009 and July 2010.
The number of fresh SIPs registered with CAMS was at 2.31 lakh in July 2010, up from 1.59 lakh in June 2009.
According to CAMS, these fresh SIPs made up 57% of the total market. Data on the remaining fresh SIPs was not available as attempts to reach Karvy Mutual Fund Services failed.
For all that, however, net inflows into equity mutual funds were still in negative territory in August 2010. June 2009 had seen net inflows of `1,493 crore into these schemes, whereas August 2010 saw net redemptions of `2,890 crore.
“The number of SIPs was drying up toward the end of 2008, but we have seen that the figure has gradually progressed. People do not want to invest lump sums,” said an industry official not willing to be named.
Volatility in the markets may have a role to play in this newfound zeal for SIPs.
Distributors and fund houses too have been encouraging people to come through the SIP route, the official said.
Fund houses had been communicating the strength of SIPs to investors through mailers and advertisements. R S Srinivas Jain, chief marketing officer at SBI Mutual Fund, had on an earlier occasion told DNA Money of a drive wherein the fund house sent a mailer to investors who had stopped their SIPs post the 2008 meltdown on how much they would have earned had they stuck to their investments through SIPs. Fidelity Mutual Fund and Tata Mutual Fund have also been advertising the power of SIPs and their merits as a way to invest in funds.
