Big bet on SIPs: MFs garner over Rs 49,000-cr in first six months of FY20

Retail investors are preferring the SIP option for investing in mutual funds, as the industry garnered more than Rs 49,000 crore through this route in the first six months of the current fiscal, up 11 per cent from the year-ago period. A total of Rs 44,487 crore was collected through such investment plans in April-September 2018, as per the Association of Mutual Funds in India (AMFI).

Systematic investment plans or SIPs have been the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk, the industry body noted.

As per the data, SIP contribution in April-September 2019-20 stood at Rs 49,361 crore. Inflows into SIPs have averaged about Rs 8,000 crore for the 12 months till September this year. Over the past few years, inflows through SIPs have been showing an upward trend. Investments of close to Rs 92,700 crore through the mode were seen in 2018-19, from over Rs 67,000 crore in 2017-18 and more than Rs 43,900 crore in 2016-17.

Currently, mutual funds have 2.84 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes. The industry, on an average, added 9.29 lakh SIP accounts each month during the current fiscal (2019-20), with an average ticket size of about Rs 2,900.

"The new SIP account opening are showing the robust growth. SIP is here to stay and when the broader markets show performance we see SIP outperforming," AMFI CEO N S Venkatesh said.

Kaustubh Belapurkar, Director - Manager Research at Morningstar Investment Adviser, said that investors continue to invest into equity mutual funds through SIPs.

The 44-player mutual fund industry, which mainly depends on SIPs for inflows, had assets under management of Rs 25.68 lakh crore at the end of September this year, as compared to Rs 24.31 lakh crore in September-end 2018.

SIP is an investment vehicle that allows investors to invest small amounts periodically instead of lump sum payment. The frequency of investment is usually weekly, monthly or quarterly. It is similar to a recurring deposit where investors deposit a small or fixed amount every month.