Active systematic investment plans (SIP) in the mutual fund industry has touched an all-time high of one crore, with about 88.43 lakhs SIPs in the active portfolio. That’s a massive 35 per cent rise from 65.5 lakh recorded at the end of March 2016. A SIP is a mutual fund product where an investor – most often an individual – puts in the same amount of money in a particular MF plan every month, which is like saving money in a recurring bank deposit. SIPs are preferred by investors interested in buying stocks. Since the investment is less, it reduces uncertainties and averages out the investor’s cost of acquisition of fund units. Experts say that 44.87 lakh new SIPs were registered in 2016.
The increase in SIP is attributed to investor education about mutual funds especially in small towns. The monthly investment on SIP is Rs 3000 and investors are willing to wait it out. The investor education that was happening in the last 15 years has paid off- says experts. Of the total number of new SIP investors, 23 lakhs accounts represent new investors. Sometimes, an SIP may be rolled-over after its expiry. In this case, the SIP may be new but the investor remains the same.
SIP is becoming attractive since real estate is expensive and gold does not give immediate returns as expected. FDs do not yield much. SIP allows investors to have multiple portfolios. The increase in investor base into equity mutual funds is a positive development for the markets. Since markets have been rising, investors seem to have realised that they are missing out on a big opportunity. The trend of rise in new accounts in equity mutual fund is expected to accelerate as the increase is too small.