Six out of 10 SIPs active for over 5 years

The latest AMFI data shows that the majority of SIP investors have been continuing their SIPs for over five years.

Of the total 3 crore SIP accounts as on January 2020, 1.80 crore or 59% of them have been active for over five years. The total AUM of SIP accounts active for over five years was Rs.87601 crore.

Interestingly, of this 1.80 crore SIP accounts active for over five years, 1.53 crore SIP accounts were in regular plans. In other words, 84% of long term SIP accounts have come from mutual fund distributors.

Experts attribute this trend to growing popularity of goal-based investment among investors. Swarup Mohanty, CEO, Mirae Asset MF believes that there has been a significant change in the behaviour of investors in the last couple of years which can be majorly attributed to distributors. “SIP phenomenon has gained traction in the last 4-5 years because of efforts of individual MFDs. They encourage their investors to look at mutual funds as a vehicle to achieve financial goals.”

Seconding his views, Jaipur individual MFD Ashish Modani of SLA Financial Solution said that lacklustre performance of other investment vehicles has helped MF industry attract long term investors. “Many people who used to invest in bank FDs and RDs have shifted to mutual funds due to attractive returns.”

Jimmy Patel, MD & CEO, Quantum Mutual Fund points out that many distributors encourage their clients to continue their investments. “Many distributors have been helping their clients overcome behavioural biases due to which many investors continue their SIPs even if they face volatility.”

Further, AMFI data shows that 5% SIP accounts last for 4 to 5 years, 4% for 3-4 years, 10%, 2-3 years, 8% for 1-2% and 13% for less than one years.

Source: AMFI