Retail investors have
been pouring money into equity mutual funds (MFs) through systematic investment
plans (SIPs) over the last 12 to 18 months.
By investing in SIPs,
in vestors put a fixed amount every month typically into equity mutual funds to
buy units of a scheme at a predefined date. Mutual fund officials said the
stock market gains in the last two years have prompt ed these investors to increase
the size of their crease the size of their monthly installments into equity
schemes.
On an average, flows in
to equity schemes through the SIP route, which were close to Rs. 1,200 crore
per month in early 2014, have jumped to Rs. 2,100 crore per month,
according to mutual funds and top mutual fund distributors.
The average ticket
size, or value per SIP, increased from Rs. 1,900 to Rs. 2,5000 per folio, they said. Data for SIPs are not available in the
public domain.
Mr. A
Balasubramanian, chief executive officer, Birla Sunlife Mutual Fund said, “Investors are attracted to equities because other
competing asset classes such as gold is at a 5 year lows. There are no
significant inflows into real estate and interest rates on fixed deposits are
moving down“
Also, many investors
believe the market is at the start of the next major bull run as the NDA
government attempts to pull the economy out of a slumber. This has prompted
investors to start long-term SIPs.The total number of active SIPs could be
nearly 75 lakh, with the industry adding 1.5 lakh SIPs every month, according
to unofficial estimates.
Mr. Sundeep Sikka,
President and CEO, Reliance Mutual Fund said, “Investments through this route are sticky and do
not ride on a market wave and even out volatility for investors"
Post Mr. Narendra
Modi's announcement as the prime ministerial candidate in September 2013, the
stock market has gained strongly, benefitting investors who invested SIPs in
the volatile period between 2011 and 2013.
Investors also use SIPs
to stagger their investments when valuations are high or markets are heated.
Mr. Nimesh Shah, MD and CEO, ICICI Prudential
Mutual Fund said, “Currently ,
the markets are fairly valued and we have been recommending investors to make
investments via the SIP route"
Mutual fund
distributors are also driving the investments into SIPs.
Src: ET
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