Over the years, Indian retail investors have clearly made a shift in their investing attitudes and behaviour
Investors of mutual funds who invest via systematic investment plan do not seem to be perturbed by the turbulence in the domestic equity market.
This is evident from the fact that when Sensex fell nearly 5 percent in July investors flocked to register new systematic investment plans, popularly known as SIPs.
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.
During the month under review, the mutual fund industry saw the addition of 5 lakh new SIP folios taking the total number of folios to 2.78 crores, as per data shared by Association of Mutual Funds in India.
Inflows from SIP too saw a marginal increase. The total amount collected through SIPs in July was Rs 8,324.28 crore compared to Rs 8,122.13 crore in June. In comparison, during July 2018, SIP collection was Rs 7,553.84 crore.
“Despite a difficult month and volatile market conditions, equity SIP contributions are at an all-time high over the last three years. This conveys signs of maturity on the part of retail investors and is reflective of continued investor trust on the Indian mutual fund industry," NS Venkatesh, CEO, AMFI, said.
AMFI data shows that the MF industry had added, on an average, 9.32 lacs SIP accounts each month during the FY 2019-20, with an average SIP size of about Rs 3,000 per SIP account.
“Investors who are keen to remain invested in the market and believe in the long term story are not getting distracted by near term volatility. The good part is that they are not cancelling the SIP and in fact are adding new schemes to their portfolio,” said Vikram Khamkar, a Mumbai-based distributor.
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.Subscribe to Moneycontrol Pro and gain access to curated markets data, trading recommendations, equity analysis, investment ideas, insights from market gurus and much more. Get Moneycontrol PRO for 1 year at price of 3 months at 289. Use code FREEDOM.