The rise and rise of MF SIPs

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The love affair between investors and mutual funds intensified in September with record registration taking place in the month gone by. Investment in mutual funds through systematic route has grown by 4.31% quarter-on-quarter to record 10,351 crore. The figure stood at Rs 9,923 crore last month. Following the inflows in the mutual funds, assets under management of the industry also hit an all-time high of Rs 36.73 lakh crore demonstrating the continued retail investor confidence in mutual funds.

Amid the ongoing low-interest rate environment, equities emerged as the top choice of investors over low-yielding traditional savings avenues such as bank fixed deposits, small savings instruments, gold and real estate. As a result of this tide of investments, the benchmark BSE Sensex has surpassed and frequently closing above the 60,000-mark, up nearly 50% over the past year and around 125% from the lows of March 2020.

We believe that the domestic equity market will continue to outperform considering the robust liquidity, rapidly improving economic scenario aided by conducive RBI policy and easing of Covid-related restrictions. Data available with the Association of Mutual Funds in India showed that SIP folios that were opened last month stood at 26 lakh. Open-ended equity funds saw net inflows of Rs 8,677 crore in September against Rs 8,666 crore in the previous month. On the other hand, the liquid fund witnessed an outflow of Rs 48,379 crore, ultra-short duration fund Rs 10,908 crore and low duration fund Rs 16,609 crore on likely advance tax payment requirements for the half-year ended September 30.

Investors have realised that nothing works better than a systematic disciplined approach to building wealth over a period of time. SIP is one of the prudent investment options that can help one reach his financial goals without hiccups. It helps investors to average the cost of investment while reducing the volatility risk that comes with equity investing. Perhaps most important, it is light on the pocket and allows almost everyone to work out his comfortable investment quantum and assiduously keep working towards it.