Mutual fund monthly collections through systematic investment plans (SIPs) have increased by Rs.250 crore in June when compared to the figures in May 2018. SIP collections have reached an all-time high of Rs.7,554 crore in the month of June.
It has been observed that mutual fund collections through SIPs have constantly been on the rise for the past few years. The only exception to this trend was the marginal dip of SIP collections in April 2018 to stand at Rs.6,690 crore from the figure of Rs.7,119 crore in March 2018.
Real estate returns have not been very encouraging in the past few years. Gold has been providing annual returns in the range of 1% in 5 years. Banks have also not been increasing their deposit rates too often. Despite the overall increase in interest rates, the rates on fixed deposits have not seen a hike. This has coaxed retail investors to move their money into mutual funds, as it provides reasonably good returns. Investors have been increasing their allocations to equity and hybrid funds using SIPs.
In March 2014, monthly SIP collections stood at Rs.1,206 crore. This had risen to Rs.2,719 crore in March 2016. This figure has more than tripled by June 2018 as well.
It was also observed that SIP collections for FY2018 was at Rs.67,190 crore, when compared to the last financial year. This marked an increase of 53% in total collections within a year.
Managing director of Kotak Mutual Fund, Nilesh Shah, said that SIP investments are at a good momentum in spite of the challenging market situation. The distributors should be given credit for this, as they are responsible for encouraging investors to stay invested for the long term. Fund management companies have also been influential in creating awareness on investment in mutual funds for a couple of years now.