Mumbai: The systematic investment plans (SIPs) offered by mutual funds have turned out to be the most popular route through which small investors are increasing their exposure to the domestic equity markets. Instead of making lumpsum investments, small investors prefer to make monthly investments to gain exposure to the equity market.
Industry experts said that the average investment size and the number of new investor folios through systematic investment plans’ have almost doubled in the last one year as the sharp turnaround in the sentiment in the secondary markets has started attracting a lot of small investors.
“Over the last one year, the average investment size in SIPs has increased from Rs 1,900 – Rs 2,000 per month to Rs 3,700 – Rs 4,000 per month. Till December 2013, the number of new applications for investment through SIPs stood at around one lakh per month, which has now increased to over two lakh per month,” said Surajit Misra, national head, distribution and mutual funds at Bajaj Capital.
“If individuals are making investments through SIPs, they need not worry about the sharp swings in the equity market. The investment returns get averaged out in the long term. The average investment size in SIPs has increased from Rs 1,000 to Rs 1,500 per month to over Rs 2,000 per month,” said Dinesh Khara, managing director of State Bank of India Mutual Fund. The upbeat sentiment in the secondary markets have led to equity mutual funds attracting record inflows during 2014.
According to Value Research, a mutual fund tracking firm, equity mutual funds reported a net inflow of Rs 7,424 crore in 2014, the highest in last 8 years.
However, on the flip side small investors who had taken direct exposure to domestic equity markets were seen consistently offloading their shares during the past one year.
According to the provisional data available with the Bombay Stock Exchange (BSE), they have sold equities worth Rs 30,178 crore since the beginning of 2014. As against this, foreign portfolio investors (FPI) have picked up shares worth Rs 1.33 lakh crore during this period while domestic mutual funds have bought shares to the tune of Rs 32,335.5 crore according to the data available with the Securities and Exchange Board of India (Sebi).
