Systematic investment plans, popularly known as SIPs, remained the most preferred investment option among retail investors looking to enter mutual fund schemes last month.
According to data provided by Association of Mutual Funds in India, the industry garnered Rs 7,554 crore through SIPs in June, slightly higher than the Rs 7,304 crore they collected in May.
The data also reveals that the industry collected a total of Rs 21,548 crore through SIPs in April-June, 58 percent higher than the Rs 13,597 crore collected in the same period last year.
Mutual funds attributed the increased interest in SIPs to investor education and a volatile equity market, which is prompting investors to take the SIP route.
Over the last 5 months, AMFI and players from the industry have launched campaigns such as ‘mutual funds sahi hai’ and Jan Nivesh, which is helping garner interest for a push product like mutual funds.
Fund houses have applauded the increase in average ticket size of SIPs. AMFI data shows that the MF industry added 9.83 lakh SIP accounts on an average during the first quarter of FY 2018-19, with an average size of around Rs 3,300 per SIP account, compared with Rs 3,250 last year.
Currently, domestic mutual funds have about 2.29 crore active SIP accounts, through which investors regularly invest in Indian mutual fund schemes.
SIP is an investment plan (methodology) offered by mutual funds wherein one could invest a fixed amount in a mutual fund scheme periodically at fixed intervals — say, once a month — instead of making a lump-sum investment.
The SIP instalment amount could be as small as Rs 500 per month. SIP is similar to a recurring deposit, where you deposit a small/fixed amount every month.
SIP is a convenient method of investing in mutual funds through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time.
It has been gaining in popularity among Indian investors, as it helps in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.