Retail Investors SIPs In MFs are Doubles..

Systematic investment plans* (SIPs) of mutual funds (MFs) are back in vogue among retail investors as the upsurge in India's stock markets has rekindled their interest in equities.

Fresh SIP registrations with MFs have more than doubled since January, 2014, showing more retail investors are willing to bet on the share market over the longer run because of hopes of an economic revival.

According to data sourced from mutual fund registrar CAMS, the number of additions to SIP schemes in September, 2014 was nearly 3.48 lakh compared with 1.51 lakh in January, 2014.

New folio additions in September, 2014 were 5.85 lakh against 2.85 lakh in January, 2014 . Sources said the average size of the fresh SIP has grown to nearly Rs. 2,600 every month. It was in the range of Rs.  2000 to Rs. 2200 earlier.

Mutual fund industry officials said the spurt in new SIP registrations this year is in contrast to the trend in 2013, when investors were not renewing their regular weekly or / monthly investments because of weak sentiment. With the stock market bouncing back since middle February, many investors have started pouring money into equity mutual schemes again.

Mr. Chandresh Nigam, MD  and chief executive, Axis Mutual Fund. said, “There is a feeling among retail investors of being left out in the recent rally. That is why they are focussing on SIPs“

The new SIPs coupled with fresh inflows into new fund offerings (NFOs) of close - ended equity products have boosted total assets under management (AMC) of the industry's equity schemes to Rs. 2.72 lakh crore in September (2014)  from Rs.1.79 lakh crore in January (2014).

Total assets, equity plus debt, managed by the mutual fund industry as on September 30, 2014 were roughly Rs.10.6 lakh crore.

A surprising aspect of the new SIP registrations so far in 2014 was that investors in towns outside the top 15 cities - known as Beyond 15 or / B-15 towns also want to participate in the stock market rally.

Nearly 1.45 lakh SIPs from B -15 towns were added in September compared to 61,575 in January .

MF officials said the industry has been pushing distributors to sell in the smaller towns.

Mr. Saurabh Nanavati, MD and chief executive, Religare Invesco Asset Management, “Mutual funds have been working hard in the last one year to convince investors in smaller towns to / try mutual fund products. It is working“

Fresh SIP registrations in September in the top 15 cities (T15) grew to a little over 2 lakh from roughly 89,000 in January.

MF industry officials said decline in gold prices in the last year or / so and signs of weakness in real estate prices have encouraged investors to turn to equities.

Mr. A. Balasubramanian, Chief Executive Officer, Birla Sun Life Mutual Fund said, “Investors have realised that gold is in a bear market & real estate may stagnate over the next 3 to 4 years. They are investing their incremental money in equities“

*SIPs of mutual funds-somewhat equivalent to recurring deposits (RDs) of banks allows investors to stagger their investments in schemes over a pre-determined period by investing a fixed amount per month.

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