The Hindu Business Line : Investors prefer SIP route during turbulent times

According to Mr Dhirendra Kumar of Value Research, mutual fund monitor, compared to earlier down periods in the equity market, this is a new development. “SIPs are catching on. But compared to the total investments in mutual fund industry, contribution of SIPs is still miniscule – restricted to a two to three per cent.” But big NFO days are over now for some time to come, he said.

The historical dips in Indian market, however, never saw mutual fund investors exit. They stay put and wait till the recovery becomes visible in the equity market, then start quitting when large redemptions occur, he added. “This time around, the redemptions have not been more than 3 per cent,” said Mr Kumar.

Between April and September this year, as much as 10 lakh new SIP accounts have been opened to take the total to about 25 lakh, mutual fund distributors and fund managers said.

“While there was no major outflows from existing funds, fresh inflows to equity funds have clearly dwindled. But investments through new SIP accounts have gone up manifold,” said Mr Rajiv Deep Bajaj, Vice-Chairman and MD of Bajaj Capital.

Mr Sunil Singhania, Fund Manager of Reliance Capital Asset Management, said the investors were largely not committing fresh money but holding on to their investments in equity funds. He also said that there was a clear and discernable trend in increasing popularity of SIPs.

According to Mr Anil Kumar, CEO of Birla Sun Life, his organisation saw a phenomenal growth in number of SIPs – some 15 times – in the last six months.

“We have not faced any out-of-the-normal redemption pressure in our equity funds. Liquid debt funds, however, witnessed redemptions and we have been managing it without trouble. Now that banks are lending for the short-term, we are opening lines of credit if required.”

He said fixed income short-term plans from Birla Sun Life stable, which invested in CDs, saw increase in fresh inflows.

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