There is some good news for the mutual fund industry. Close to six out of 10 SIPs have been active for more than five years, shows a note sent to fund houses by AMFI.
Of the 1.66 crore SIP accounts as on September 2017, nearly 93 lakh or 56% SIPs are active for more than five years.
While the industry has added 53 lakh new SIP accounts in April-September 2017, 16 lakh accounts were discontinued or matured during the same period.
In terms of monthly inflows, the total amount collected through SIPs has increased to Rs.5,516 crore (Rs.564 crore under direct plans and Rs.4952 under regular plan) as on September 2017. In April 2017, the industry got gross monthly inflows of 4,269 crore from SIPs. The industry has received close to Rs.30,000 crore in the first six month of the FY 2017-18 through SIP.
Interestingly, the total AUM of SIP stood at Rs. 1.76 lakh crore as on September 2017, which is around 8.6% of the overall AUM of the mutual fund industry. Of the total SIP AUM, the MF industry has AUM of 1.62 lakh crore in regular plans and Rs.14,000 crore in direct plans.
Experts attribute this to behavioural shift of investors. Swarup Mohanty, CEO, Mirae Asset believes that the investors have understood the benefits of long term investments in mutual funds through SIP. “The industry had witnessed 60% discontinuation of SIP in 2008-09 crisis. The rest of 40% who continued their SIPs have had a wonderful experience and have learned the significance of rupee cost averaging.”
Seconding Mohanty’s view, Radhika Gupta, CEO, Edelweiss Mutual Funds says that many investors have had a good experience with mutual funds through SIP due to good performance of equity funds over the past five years.
Another factor that has contributed to this trend is the efforts of IFAs. She says, “Advisers encourage their clients to invest for long term to meet financial goals.” She says that a majority of these active SIPs have been brought in by IFAs.
