Micro SIPs can play a role in MF growth story, but needs to be well thought over: Mutual Fund CEOs

CEO panel at Moneycontrol Mutual Fund Summit.

While a mutual fund's job is to provide avenues of investment, Ajit Dayal, founder and advisor of Quantum Advisors Private Limited, questioned what change will sachetization of Systematic Investment Plans (SIPs) make in investors' savings.

"If one invests Rs 250 though a SIP and it becomes Rs 750 what meaningful change is going to happen to a person's life?" said Dayal at the Moneycontrol Mutual Fund Summit held in Mumbai on August 21. He further said that it will open up investment avenues for investors but it has to be thought over.

While Radhika Gupta, managing director and CEO of Edelweiss Asset Management in the same event said that the reason AMCs do not promote micro-SIPs is because there a number of costs involved with a micro-SIP.

However, Gupta also pointed out that if investors are willing to spend Rs 100 a month on subscriptions like Amazon Prime or Netflix, she is "excited" that they could just as easily allocate that money towards a SIP.

Sebi Chairperson Madhabi Puri Buch recently had said that over the next three years, more number of investors would be able to invest in mutual funds through SIPs of little as Rs 250 a month.

She had said that the Rs 250-SIP would not only be real, but it would be hugely profitable for the industry. “The magic is sachetisation of MF products and that’ll lead the growth of the Indian MF industry in the next three years,” she added.

Most fund houses require a minimum monthly investment of Rs 1,000 for SIPs, with only a few permitting SIPs as low as Rs 500, and even fewer allowing investments of just Rs 100 per month. Buch has said that running these micro-sized SIPs on a large scale is currently not financially viable without advancements in technology.

ICICI Prudential Mutual Fund was the presenting partner for the summit, while Motilal Oswal Mutual Fund was the co-presenting partner. The event’s knowledge partner was Kfintech and event partners were HSBC Mutual Fund and DSP Mutual Fund.