In a turbulent volatile phase of 2019 so far, retail equity money has proved to be a sticky one.
The growing SIPs or systematic investment plan inflows sustained through the downfall of July August 2019 and sustaining incremental numbers point to this long term money flowing into mutual funds.
This trend is indicated by the SIP numbers released by the Association of Mutual Funds in India (AMFI).
According to AMFI, the assets under management of for the first time ever touched the Rs 3 trillion-mark in October.
Investors put fixed amounts in a mutual fund scheme at regular intervals through SIPs - say on a monthly basis -- instead of making a lump-sum investment. The investment amount can be as small as Rs 500 per month.
AUM of SIP have witnessed a year-on-year rise of 18 percent rise.
N S Venkatesh, Chief Executive, AMFI said, “SIP AUM crossing the Rs 3 trillion landmark for the first time ever and the continual rise in SIP accounts are a positive reflection of the disciplined approach adopted by the retail investor fraternity.”
In terms of inflows through SIPs, as on October-end, the inflows stood at Rs 8,246 crore, up 3 percent from a year ago.
Mutual fund expects the SIP inflows to continue in the coming years as well due to the long term growth story of Indian
“We expect equity markets to perform better in the coming quarters, as the positive impact of government initiatives trickles down in the economy, driving further inflows in mutual funds,” Venkatesh said.
Over the years, Indian retail investors have clearly made a shift in their investing attitudes and behaviour.
As per RBI data, the share of currency and deposits holding in Indian households reduced from 55 percent in FY16 to 51 percent in FY18. And in fact, the share of equity in the pie of Indian household savings increased from 3 percent in FY16 to 8 percent in FY18.
Moreover, retail investors seem to have found their preferred investment route in the form of SIPs.
Twist in the tale
The net inflows into equity mutual fund schemes fell to Rs 6,037.78 crore in October from Rs 12,622 crore a year ago while the year-on-year SIP numbers indicate a growth.
The ever increasing SIP numbers and inflow money amounts stand in contrast to a pointed decline in October 2019 over October 2018.
It is for mutual funds to take notice that lumpsum month-wise amounts are tricky monies, as they can decline any time whereas the long term committed every month SIPs have kept the inflows coming.
To that extent the last mile retail investors needs to be serviced better than other investor classes.
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