Perpetual SIPs find favor among distributors
Mumbai: MF industry is witnessing a change in SIP investment model. Earlier, SIPs ran for a fixed period and had to be renewed on completion of the period. But now the trend of perpetual SIPs seems to have caught on.
Top officials from the industry revealed that perpetual SIPs are now being pushed by financial advisors as it makes sense to invest for a longer horizon. It is also a better revenue generating model for advisers.
“If an investor invests for five years in an SIP, the averaging holding will be for two and half years. It is always advisable to invest for a longer term in a SIP,” says Hemant Rustagi, CEO Wiseinvest.
For a big investor, it becomes difficult to keep a track of all SIP investments and their renewal dates. To make the process more efficient, investors are being suggested perpetual SIP, revealed a top AMC official. According to him, given the nature of equity funds, an investor is benefited if he invests for a longer period of horizon.
“We started perpetual SIP long back and it has turned to be a big success. We are seeing new incremental growth in perpetual SIPs,” said Sundeep Sikka, CEO, and Reliance Mutual Fund.
While Rajiv Anand, MD and CEO, Axis AMC says they only sell perpetual SIPs, Srinivasan Jain, CMO, SBI Mutual Fund sees it as good investing model for AMCs. “In a perpetual SIP, we do not have to worry about the SIP’s terminating dates. I feel it will be a popular investment option in future,” he said.
Piyush Desai of Vcare Investment Ltd, said, “The compounding effect after five years in a perpetual SIP is far better than one year SIP. Most of my clients are interested in investing through perpetual SIPs.”