There is a continuous reposition in investor faith in mutual funds, and the systematic investment plan route continues to be the favored option to get exposure to the equity market. But even MF SIPS has slowed down a bit.
As per data by the AMFI, the monthly contributions by SIPs fell from INR 7,927 crores to INR 7,830 crores in the month from June to July. At the same time, the number of SIPs that have been discontinued also showed an increase.
While 6.5 lakh SIPs were discontinued in June, the figure stood at 7 lakhs in July.
As per mutual fund managers, this fall can be attributed to the deteriorating economic scenario, job cuts, and other economic disturbances, which are forcing investors to discontinue these schemes.
There was a rise in the equity market during July, which then prompted investors to turn to SIPs, and the new industry added 11 lakh accounts last month. However, in comparison, 9.13 lakhs of new accounts were opened in June.
Also, last month, Nifty rose 7.5 percent and the Sensex gained 7.7 percent.
Considering the rising net SIP registrations, and the increasing overall mutual fund average assets under management, it is apparent that investors continue to have confidence in the market. The AUM of MF companies that came through the SIP route touched INR 3.19 lakh crores in July. This is an increase of INR 19 lakhs from a month ago.
Presently, mutual funds have 3.27 crores SIP folios. Investors are investing regularly through these.
The overall total AUM of this 42 player industry was at 27.1 lakh crores in July, having increased by INR 25.5 lakhs in June.
What is a SIP?
SIP is an investment route that is offered by mutual funds, through which investors can invest fixed amounts in mutual funds periodically, at decided fixed intervals, for instance, once a month. This comes as an alternative to making lump sum investments.
The installment amount can be as little as INR 500 per month.
In other words, an SIP is the same as an RD, wherein you deposit a small fixed amount every month. This is a convenient method of investing in MFs since all you have to do is give standing instructions to debit your account each month. This also saves you from the hassle of writing out cheques each time.
Across Indian investors, SIPs are gaining great popularity. They not only help in rupee cost averaging, but also helps in investing in a very disciplined manner without having to worry about market volatility and market timings. The investor, through averaging cost, is also able to fetch more units when the prices are low, and lesser units when prices are high.