The percentage of SIP investors staying invested for the long term has increased. AMFI data shows that of the 2.11 crore SIP accounts as on March 2018, 1.22 crore or 58% SIPs have been active for over five years. The number of SIP accounts increased by 15.91 lakh in the last quarter of FY 2017-18.
Experts attributed this to increased awareness of mutual funds and fall in the returns of traditional saving instruments.
G. Pradeepkumar, CEO, Union Mutual Fund pointed out that investors have matured. “Earlier many investors used to churn their portfolios and invest in the funds that gave highest returns. Advisors have educated their clients about the negative effect of portfolio churning on their returns. Investors have matured and now we see very little churning taking place and more investors have opted for perpetual SIPs,” said Pradeepkumar.
Vinod Jain of Jain Investments believes attractive returns of equity mutual funds compared to the returns generated by other traditional means are encouraging investors to stay invested. “Many investors who have received good returns from equity funds are asking their friends and family members to invest in mutual funds. In addition, it has become very convenient to invest and redeem mutual fund units. As investors are aware that they can redeem their investment anytime they want, investors are comfortable holding their investment for the long term,” said Vinod.
Mumbai based Suresh Sadagopan of Ladder7 Financial Advisories says investors have understood the importance of staying invested for the long term to achieve financial goals. “Typically, investors start their SIP investment when they are in the accumulation phase. They want to build a corpus to help achieve their goals that are at least five years away such as child’s education and retirement. SIP is a convenient way to achieve their financial goals,” said Suresh.
AMFI data also shows that the total AUM of SIP accounts active for over five years is Rs.38,808 crore. However, the AUM of SIP accounts to stay invested for over five years has decreased by Rs.2,258.48 crore due to the fall in markets.
The BSE Sensex fell by 3.19% in January-March 2018.
AMFI data also shows that the industry collected close to Rs.20,188 crore in January-March through SIPs. The average SIP ticket size in these three months was Rs.6,729. The total AUM of SIPs stood at Rs.1.98 lakh crore as on March, i.e. 9.3% of the overall AUM of the mutual fund industry.
Overall, the MF industry has added about 9.70 lakh SIP accounts each month on an average during FY 2017-18 as against an average of 6.27 lakh SIP accounts each month during FY 2016-17.
Also, most of these SIPs have come through distributors. AMFI data shows that regular plans constituted 1.9 crore SIP accounts while 17.56 lakh SIPs were in direct plans. The AUM of SIPs under regular plans is Rs. 1.81 lakh crore whereas the AUM of SIPs through direct plans stood at Rs.17,759 crore.
