Systematic investment plans (SIPs) have become the white knight for the battered mutual fund industry, reports CNBC-TV18's Vidhi Godiawala and Mitra Joshi.
2011 has begun on a strong note for the mutual fund industry. Experts say January saw inflows of Rs 8,000 crore against last year's monthly average of Rs 4,000 crore. And February added a cool Rs 7,000 crore to the kitty. And SIPs, they say, have played a significant role in this increase in inflows.
A Balasubramaniam, CEO, Birla Sun Life Mutual Fund said, "We add about 25,000 to 30,000 new SIPs. There is an upward trend, even the 17% of our assets come from SIPs but a true indication that how sustainable is the retail assets come in equity mutual funds."
There are over 35 lakh folios in SIPs alone. and nearly 40 lakh revolving transactions take place in SIPs every month. This means SIPs make up almost 20 percent of the total equity assets of a fund house.
Ajit Menon, Executive VP and Head – Sales, DSP BlackRock AMC says, "Last year at this time we were doing 7,000-8,000 new rSIP registrations a month. Now, this is 20,000 a month. The story is the same for the rest of the industry."
Here's some more trivia: 90% of the SIP money is directed at pure equity, 6% at hybrid plans, and 4 percent into pure debt.
Industry watchers say there are three reasons for this surge in SIPs. SIPs have been offering strong returns even during volatile times.Two. SIPs cater to even those investors who do not have a large pile of cash lying around with ULIPs taking a beating, distributors are pushing SIPs as the next big investment opportunity.
Source: http://www.moneycontrol.com/news/mutual-funds/sipswhite-knight-for-battered-mf-industry-_533577.html
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