Retail investors have continued to remain buoyant with SIP flows in mutual funds reaching to Rs7,985 crore in October, a surge of 42% from the year-ago level, despite stock market volatility on the back of rupee depreciation and rising crude oil prices.
With this, total funds garnered through SIPs (Systematic Investment Plans) have reached to Rs52,472 crore in the current fiscal so far (April-October), according to the data available with Association of Mutual Funds in India (Amfi).
In the entire 2017-18, over Rs67,000 crore was mopped-up through SIP route, which is more than Rs43,900 crore in the preceding fiscal.
SIPs have been the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk. Further, investors are not showing interest in traditional asset classes like real estate and gold and are preferring financial assets such as mutual funds.
As per the latest data, SIP contribution in October this year was Rs7,985 crore, much higher than Rs5,621 crore seen in October last year, indicating a growth of 42%. The flow rises 30% month-on-month basis to Rs7,727 crore in September.
“Over the last year, there has been a 30% growth in retail folios, 14% growth in retail AUM and over 40% growth in monthly SIP contributions. This shows that the retail investors continue to repose their faith in mutual funds,” Amfi CEO NS Venkatesh said.
Industry experts believe that contribution through SIPs surged despite stock market volatility on the back of rupee depreciation and rising crude oil prices.
Besides, net inflows into equity mutual funds (MFs) increased to Rs14,783 crore in October as compared to Rs11,251 crore in the preceding month.
MFs have 2.5 crore SIP accounts through which investors regularly invest in the Indian mutual fund schemes. In the current fiscal, over 10 lakh SIP accounts were added each month on an average, with an average ticket size of Rs3,200.
SIP is an investment vehicle that allows investors to invest in small amount periodically instead of a 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.