Fund managers said investors have continued to retain their faith in SIPs despite the market volatility. At the same time, they fear investors might discontinue SIPs after looking at the negative returns
Systematic investment plans (SIPs) have been the saving grace for the mutual fund (MF) industry amid market volatility.
According to the data provided by Association of Mutual Funds in India (AMFI), the 43-member-strong MF industry has managed to garner Rs 8,095 crore through SIPs, slightly higher than the Rs 8,064 crore collected in January.
This despite inflows into equity funds, including equity linked saving schemes, declining 17 percent on a month-on-month (MoM) basis to Rs 5,122 crore in February.
Monthly equity inflows have come off significantly from the high of Rs 20,308 crore seen in November 2017.
Assets under management (AUM) for the MF industry stood at Rs 23.16 lakh crore as at February-end, almost flat compared to the previous month.
Fund managers said investors have continued to retain their faith in SIPs despite the market volatility.
The data also reveals that the industry collected a total of Rs 84,648 crore through SIPs in April-February, higher than the Rs 67,190 crore collected in the same period last year.
At present, domestic MFs have about 2.29 crore active SIP accounts through which investors regularly invest in Indian schemes.VolatilityIn the last one month, the volatility index (VIX) is down 4 percent.
In February, the Sensex and Nifty shed 1.1 percent and 0.4 percent, respectively. Asset managers said the decline can be attributed to fading equity outlook, market volatility and weak global cues.
Amid this, SIPs have found favour among investors and their interest has increased, thanks to investor education.
Over the last five months, AMFI and players from the industry have launched campaigns such as 'mutual funds sahi hai' and Jan Nivesh, which is helping garner interest for a push product like MFs.
Generally, SIPs are the preferred route for retail investors to deploy money in MFs as it helps them reduce market timing risk.
So far, while fresh investments into equity MFs have come-off, the industry is not witnessing significant SIPs cancellation, fund managers said.
SIP is an investment plan (methodology) offered by MFs, wherein one could invest a fixed amount in a 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 convenient method of investing in MFs through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time.It has been gaining in popularity among Indian 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.Not sure which mutual funds to buy? Download moneycontrol transact app to get personalised investment recommendations.