Investors bet high on SIPs: MFs garner Rs 672 bn in FY18, up 53% from FY17

The increased interest in SIPs can be attributed to the strong performance of equity schemes and investor education initiated by Amfi and mutual fund houses

Retail investors are preferring SIP option for investing in mutual funds, with the industry garnering around Rs 671.9 billion through this route in 2017-18, an increase of 53 per cent from the preceding fiscal.

In comparison, Rs 439.21 billion was collected through the investment plan in 2016-17, according to the latest update with Association of Mutual Funds in India (Amfi).

The increased interest in SIPs (systematic investment plans) can be attributed to the strong performance of equity schemes and investor education initiated by Amfi and mutual fund houses, Geojit Financial Services Executive Director Satish Menon said.

He further said the new Sebi's announcements of reducing the mutual fund expense ratio to 5 basis points from 20 basis points along with recent market corrections will create a lucrative environment for investing through the SIP route in the market.

As per the latest data, on an average, the mutual fund industry added about 0.97 million SIP accounts each month in 2017-18 as against an average of 0.627 million in the previous financial year.

The industry had garnered Rs 71.19 billion last month through SIPs as compared to Rs 43.35 billion collected in March 2017. Moreover, the average SIP size was Rs 3,375 per account last fiscal.

Currently, mutual funds have about 21.1 million SIP accounts through which investors regularly invest in Indian mutual fund schemes.

SIPs have been the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk.

It is an investment vehicle that allows investors to invest in small amount periodically instead of lump sum. 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.