SIP investors stay put for long term. AMFI data shows that almost six out of 10 SIP account are active for over 5 years.
Of the total 1.59 crore SIP account in August, more than 55% or 88.2 lakh SIP accounts have been active for over five years. These SIP accounts have assets of Rs.37,000 crore as on August 2017.
Currently, the mutual fund industry has AUM of Rs.1.72 lakh crore through SIP.
Source:AMFI
Experts believe that advisors encourage their clients to link their investment with financial goals such as retirement, children education or foreign holiday.
Mumbai-based Nisreen Mamaji of MoneyWorks Financial Advisors says investors have understood the importance of long term investment to achieve financial goals. “Many investors have realised that they can achieve their financial goals through regular investment in mutual funds and SIP is the best way to do it. These investors do not bother about market volatility and believe in staying invested till they achieve their goals,” says Nisreen.
Amol Joshi of PlanRupee Investment Services seconds Nisreen. He says that investors have been increasingly opting for goal-based planning be it retirement or children education and hence they stay invested to achieve these goals.
Another factor that has inculcated long term investment habit among the investors is good performance of equity funds. “Many schemes have delivered attractive returns for the last three years. In addition, the industry has propagated that equity funds can outperform other asset classes over the long term,” says Amol.
However, AMFI data shows that 23 lakh SIP accounts or 15% of the total SIP account last for less than a year.
Experts attribute this to irrational investor behaviour. “Many investors invest in mutual funds after looking at past performance. Such investors keep on changing their portfolios after change in rankings,” says Joshi.
The data also shows that 9% of the SIP accounts are in direct plans. Of the 1.59 crore SIP accounts, 14 lakh SIP accounts are in direct plans. The industry has collected Rs.538 crore in August through direct plans.
Suresh Sadagopan of Ladder7 Financial Advisories believes that the direct investments in SIP would go up in future. “I think direct plans are getting popular among retail investors due to increasing awareness about it,” says Suresh.
Overall, industry received a monthly inflow of Rs.5,206 crore through SIPs. The monthly SIP inflows increased by Rs.1,709 crore from Rs.3,497 crore in August 2016, a growth of 48%.
Source: AMFI
