IFAs are becoming the rainmakers for industry, especially in the SIP market. They channelize close to half of the SIPs in the industry.
IFAs command 46% market share of the industry SIP count as on September 2015. The other channels like national distributors and banks account for 37% and 17% market share respectively. This data was presented by Himashu Vyapak, Deputy CEO, Reliance Mutual Fund at the IFA Galaxy event held in Chennai in October.
IFAs share in industry SIP count
|
Industry SIP count |
% market share |
|
IFAs |
46% |
|
Bank |
17% |
|
ND |
37% |
If we analyze closely, IFAs command a much higher share, as much as 83% of the SIP market, if we club NDs with IFAs. This is because national distributors like NJ India and Prudent appoint sub-brokers or IFAs who channelize majority of their business. For instance, Surat based NJ India, the largest ND, has 20,000 sub-brokers who sell mutual funds.
According to rough estimates, the industry currently has 80 lakh live SIPs. This means IFAs alone service 36 lakh SIPs, which shows that they have contributed in helping retail investors participate in markets through the SIP route in a big way.
“We avoid taking lump sum investments from first-time MF investors unless it is meant for tax saving. Majority of our clients are working class, who like the SIP concept. A lot of our investors who started with investing through SIPs now only invest through SIP mode,” says a Navi Mumbai based IFA who has close to 9,000 SIPs.
IFAs command a sizeable share of not only the SIP count but also the SIP amount (the total AUM of SIP). In terms of SIP amount, IFAs have 51% market share while national distributors and banks account for 25% and 24% market share respectively.
IFAs share in industry SIP amount
|
Industry SIP amount |
% market share |
|
IFAs |
51% |
|
Banks |
24% |
|
ND |
25% |
Industry officials say that a majority of the inflows coming through SIPs comes in equity funds.
In an earlier interview with Cafemutual, Harsha Upadhaya, CIO, Kotak MF had pointed out that a large chunk of equity inflows are coming through SIPs. “For the last 18 months or so, equity mutual funds have been witnessing consistent inflows. This has not changed even with market showing higher volatility in the last couple of months on the back of emerging market currency scare. The equity mutual fund SIP book of the industry has gone up considerably during this period, and now amounts to about Rs. 30,000 crore annually (40-45% of total yearly inflows) – this is a very good sign. Not only are the existing investors investing for longer periods now, but also we have seen healthy increase in new investor folios.
Advisors attribute the growing acceptance of SIPs due to the positive experience of investors in volatile market conditions. “The SIP market has grown due to three factors. Firstly, investors are beginning to invest with a goal which requires regular commitment. Secondly, investors are getting confident about equity as an asset class. Thirdly, investors have better returns by investing regularly through SIPs. All these factors have contributed to the popularity of SIPs,” says Hemant Rustagi of Wiseinvest Advisors.
Distributors says that the industry should focus on growing the number of SIP investors. “The number of unique SIP investors would not be big considering the fact that each investor tends to have 4-5 SIPs,” points out a Mumbai based distributor.
