The Hindu Business Line : SIPs gaining weight among retail investors

THE Systematic Investment Plan (SIP) is growing in popularity among retail investors in the equity schemes of mutual funds as the best route to increase long-term returns.

This comes on the heels of an aggressive sales campaign by mutual funds.

Industry hands said the aim was to educate retail investors about the benefits of regular investments against an attempt to predict the ideal time to invest a large amount.

The Sundaram Asset Manament's Managing Director, Mr T.P. Raman, said the fund began marketing SIPs aggressively last year.

SIPs result in a "lot of stability in inflows," he said

Industry hands said that funds now had enough data to show that a regular investment in most equity schemes produce a better result than a one-shot investment.

An industry official said the aggressive marketing of SIP could also be traced to a belief that the equity market is on the verge of a sharp fall. In this backdrop, regular investments would be the most sensible approach, he said.

Most mutual funds have removed the entry charge on their SIPs to encourage retail investors. Generally, entry charges are used largely to meet the distributors' commissions. In the case of SIPs, "Asset management companies are willing to make investments to get long-term retail investors in," said Mr Rajan Krishnan, Vice-President, Sales and Marketing, Principal PNB Asset Management.