Inflow of SIP continues to drop in economic environment

Inflow of SIP continues to drop in economic environment

Amidst the dispute with the COVID 19 in restricting the economic environment, for the fifth time in a row, the investments made in mutual funds via systematic investment plans has dropped to Rs. 7,791 in August.

The data obtained from the Association of Mutual Funds in India recorded a tremendous withdrawal of Rs. 4,000 crores from the equity funds in August which has its lifeline of credit inflow through the systematic investment plan, higher than the previous month withdrawal of Rs. 2,480 crores.

The director of investment solutions, Sharekhan by BNP Paribas Mr. Jean-Christophe Gougean on a questionnaire session replied that due to the change in the current economic environment inflicted by the COVID 19 pandemic, the retail investors are heavily affected as well as on the other hand, the inflows through the systematic investment plans are also reducing.

He also added that to survive in the pertaining economic environment and to reduce the risk on their portfolio investment by selling equity funds, the retail investors are pulling back their SIP investments.

According to Gougeon, the systematic investment plan remains a tragedy for some period for the short term, whereas both the systematic investment plans and the lump sum benefits for the long term run remain promising in the mutual funds.

 The industries through systematic investment plans have raised about Rs. 7,791 crores via the systematic investment plans which are lower than the last month according to the recent statistics, when compared to the raising of Rs. 7,831 crores procured in July.

It is where during August the Investment had a downforce, since September 2018 where the collection stood at Rs. 7,727 crores.

The downfall was marked with the record of fund collection made through a systematic investment plan to Rs. 7,917 crores in June 2020 is lesser than the Rs. 8,000 crores compared to the tag line of investment in May with Rs. 8,123 crores, Rs. 8,376 in April and Rs. 8,641 during March.

Since the equity market helps in reducing the market timing risk, the experts believe that the mutual is the one where the retail investors have predilection over it even though the credit inflow investment made via systematic investment plan has reduced for the past five months.

There is a net addition of about 3.43 lakhs portfolios, when there is an equal backlog of dropping in the systematic investment plan, indicating the constant market trend of the retail investment,” added by CEO of the Union Asset Management Company Private Limited.

At present, to invest in the Indian mutual fund schemes and policies, about 3.27 regular investors are investing through SIP accounts.

Instead of dumping all the credit inflow through investment in lump sum form, SIP is a structured plan or the mutual fund scheme, enabling the investors to invest at a fixed period.

The Systematic Investment Plans is almost considered as a recurring deposit scheme.