The industry has added 13 lakh SIPs between January and July.
The equity market rally is helping mutual fund industry get more investments through the popular systematic investment route.
According to data provided by CAMS, the industry saw 15.8 lakh new SIP registrations in 2013. In 2014, the industry has already registered 13.08 new SIPs. CAMS aggregates 91% industry data in its data bureau services. By the end of December, industry officials are optimistic of adding more SIP investors in MF fold.
According to CAMS, there were 31.90 lakh SIPs in December 2013. As on July 2014, the total number of live SIPs has increased to 34.30 lakh.
If we add SIP numbers of Karvy, the second biggest R&T, the total number of SIP goes up to around 50 lakh. If we add Sundaram Mutual Fund, the number could touch 53 lakh. This is still around 20% less than the estimated peak of 65 lakh SIPs in 2010.
“The mood is positive and clients are starting new SIPs, especially in diversified equity funds. The ELSS investment limit has also been hiked by Rs. 50,000 which is also helping industry get more inflows through SIPs. We are seeing that SIP closures are coming down,” says Gajendra Kothari of Etica Wealth Management.
“The numbers are definitely growing. We were adding SIPs when the industry was losing SIP accounts during bad market times,” said a senior official from foreign fund house.
Equity markets as measured by the broader BSE Sensex is up 29% YTD. Although the number of folios have declined drastically over the last four years, there are some signs of hope. The number of equity folios are now witnessing a rise slowly. SEBI data shows that the industry added 48,577 equity folios in July.
Sunil Subramaniam, Deputy CEO, Sundaram Mutual Fund revealed that with the revival in markets many investors are rolling over one year SIPs. “We are seeing increasing participation of investors through SIPs across category, especially in our mid cap fund. Those who had signed up for one year SIPs are rolling over for a longer term. Most salaried individuals prefer to invest through SIP route. Distributors are increasingly advising their clients to invest through SIPs,” said Sunil.
Mouthwatering SIP returns is leading investors to sign up for new SIPs. According to Value Research data, one year absolute average SIP return of equity funds has been 67% (excludes sector funds). The three average year SIP returns has been 28%. Majority of schemes which have done exceedingly well are those in the mid and small category.
Three year SIP returns
|
Scheme |
3 year returns |
|
Reliance Small Cap Fund |
50 |
|
Franklin India Smaller Companies Fund |
48 |
|
Birla Sun Life Pure Value Fund |
46 |
|
UTI Mid Cap Fund |
44 |
|
Canara Robeco Emerging Equities Fund - Regular Plan |
43 |
“SIP returns have been good for the past one, three and five years. We believe if interest rates drop the SIP number will grow further. New investors are also preferring to invest through the SIP route,” said Vinod Jain of Jain Investments.
If
the sentiment remains upbeat, mutual fund industry officials are hopeful that
the SIP numbers will grow further from here.
