SIPs gain investor interest in May, garner over Rs 4,000 crore

Systematic investment plans, popularly known as SIPs, continued to remain the favourite investment option among retail investors for investing in mutual funds last month.

According to the data on Association of Mutual Funds in India, industry garnered Rs 4,584 crore through SIPs in May. In comparison, during April fund houses collected  Rs 4,270 crore in April.

Mutual funds attributed the increased interest in SIPs to investor education and robust performance of equity schemes.

Fund industry applauded the increase in average ticket size of SIPs. AMFI data shows that the MF industry had added about 6.26 lakh SIP accounts each month on an average during the FY17, with an average SIP size of about Rs 3,200 per SIP account.

Indian mutual funds have currently about 1.40 crore SIP accounts through which investors regularly invest in fund schemes.

SIP is an investment plan (methodology) 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 instalment 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.

SIP 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.

Along with ease of investing it also gives the diversification benefits, most investors prefer mutual funds to equities or bonds.