In the volatile market what is driving the Mutual Fund SIPs inflow
Mutual Fund SIPs (Systematic Investment Plan) is known as the systematic way of creating wealth in the long run. Nowadays SIP is in the news. Because of the rise of SIP accounts in the first quarter of Financial Year 2019 despite the volatile market.
According to the report of the Association of Mutual Fund in India (AMFI), in April-June of Financial Year 2019, we collected 58 percent higher amount through SIP than the same period last year. And Mutual Fund industry added 9.83 lakh SIP accounts during the first quarter of Financial Year 2019. The average size of around Rs. 3,300 per SIP account as compared with Rs. 3,250 last year.
Currently, there are 2.29 Crore active MF SIPs account, through which investors regularly invest in Mutual Fund schemes.
There is around 4 percent fall down in the BSE Midcap and Smallcap indices since the start of January. While the Sensex has risen around 5 percent.
The high price of crude oil, depreciation of rupee against dollar and FII (Foreign Institutional Investor) outflow are the reason of volatility in the market.
According to the report, Investors are not worried to do MF SIP, despite the volatility in the market. Many advisors are seeing this as the investors are becoming more savvy and mature.
SIP is a way of investing systematically in Mutual Funds. A fixed amount is invested periodically (say once a month) at fixed intervals. You can start a Mutual Fund SIP as small as Rs. 500 or 1000. SIP work same as Recurring Deposit, where you deposit a fixed amount every month.
Mutual Fund investment through SIP is gaining popularity among young Mutual Fund investors. Because the process of SIP is easy and convenient. It also helps in rupee cost averaging and investing in a systematic way without worry about market volatility. SIPs help the investor average his cost over a period of time. You can buy more units when prices are low and fewer units when prices are high.
The current scenario of Mutual Fund SIP is working great in the volatile market. Because Volatile means buying more units at a low price and selling at higher prices.
Over the last few years, the investors have learned to ignore the market noise and continue investment through SIP. Experts feel that this inflow of SIP is because of the education initiative by AMFI & Industry.
This systematic investment has helped many SIP investors build an impressive portfolio. This provides confidence to MF officials who now feel that SIP flows will remain steady and will not go away during market volatility.
