The assets under management (AUM) of Systematic Investment Plans (SIPs) touched an all-time high of Rs 3.12 lakh crore in November.
Inflows through SIPs stood at Rs 8,272 crore as against Rs 8,246 crore in October, registering an increase of almost Rs 26 crore month-on-month.
This data was shared by NS Venkatesh, Chief Executive Officer, Association of Mutual Funds in India in a concall held to discuss AMFI monthly numbers.
In the calendar year 2019 so far, the total inflows through SIPs stood at Rs 65,880 crore.
Currently, mutual funds have about 2.94 crore SIP folios through which investors regularly invest in the schemes.
AMFI data also shows that the MF industry added, on an average, 9.55 lakh SIP accounts each month during the current financial year (FY20), with an average SIP size of about Rs 2,800 per SIP account.
"This investment spree through SIPs despite intermittent bouts of volatility in the market, suggests not only the confidence of investors in mutual funds but is also reflective of their matured behavior. In today's fast-paced era, ease and convenience of investing matters the most and that is why SIPs have been able to capture the mindshare of new age investors," said Venkatesh.
He also said that 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.
Fund managers attributed the all-time high AUM numbers to savvy investors who are sticking to their long term SIPs.
"Investors are becoming more savvy and as they are looking to invest in the economy for the long term. They are not so much concerned by short term news flows and volatility. One of the things if you see the amount of SIP money has been steadily going up. SIPs are not something that investors shift out based on how the current outlook changes. 65 percent plus SIPs are booked by investors for 5 years or plus. So they won't go out in a hurry or take a call based on market volatility," said an equity mutual fund manager.
Overall AUM of 44-player mutual fund industry also saw its AUM figures surpassing Rs 27 lakh in November.
What are SIPs?
SIP is an investment method offered by mutual funds wherein one could invest a fixed amount in a mutual fund Scheme periodically at fixed intervals - say once a month instead of making a lump-sum investment.
The SIP installment amount could be as small as Rs 500 per month. SIP is similar to a recurring deposit where you deposit a small/fixed amount every month.
It is a very convenient method of investing in mutual funds through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time.
SIP has been gaining popularity among Indian MF investors, as it helps in Rupee Cost Averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.
SIPs help the investor average his cost over a period of time, fetching more units when prices are low and fewer units when prices are high
Generally, buying at low prices and selling at high prices in SIP works brilliantly because the volatility means you buy more units at lesser price and hence your ultimate returns will be very good.