SIP Investments Reached Rs 7985 Crore Despite Market Fluctuations. What Should You Do?

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The mutual fund industry is indubitably gaining huge popularity in recent years. With the changing interests of the people from their lifestyle to eating habits and what not, the investment options which were once a part of every earning member’s life such as FD, RD, etc., have now been somewhere replaced by mutual funds. Let’s find out what it has for you if you still are planning to opt this investment avenue.

What was the Structural Growth in AUM?

The asset under management has grown to Rs 35, 529 crore as compared to the outflows of Rs 2.3 lakh crore in September 2018. This AUM is known to increase by more than two and a half fold in a span of five years, making it Rs 22.24 lakh crores on October 31, this year.

The experts of the industry consider the shift of household savings from physical to financial assets and rising share of MFs within financial savings as to be the key catalysts of this steady AUM growth. The trend, popularly referred to as 'financialisation of savings', or increased size of the financial sector, received a push after demonetisation, and this resulted in a sharp uptick in inflows for the MF industry.

It is expected that the industry can see the AUM reach to a number of Rs 94 lakh crore by 2025 on the back of increased distribution reach and strength.

Why SIP Remained the Most Favorite Investment Option?

Investors followed the path of SIP investments in equity funds with flows recording to an all-time high of Rs 7985 crore with a rise of 258 crore as compared to September collection. This increase was despite the sharp correction in the markets with the Nifty touching the lowest point of 10,005, this calendar year.

Seeing this, industry specialists attributed the increased interest of investors in SIPs to education and matured investment behavior.

People have been using the event of correction in stock prices to add equity to their portfolio and increase their long-term allocation to this asset class. Another reason why people are preferring Systematic Investment Plans for investment is that they are understanding that it can help them beat inflation in the long run.

What Changes were Seen in Liquid Funds’ Inflow?

Liquid mutual funds have been the centre of attraction during the recent volatility in the equity markets as well as fixed income markets. It gained an inflow of Rs 55,296 crore in October. This comes as a big break for liquid funds as there was a huge outflow of around Rs. 2.11 lakh crore in the month of September. However, there was a cause and effect of the Infrastructure Leasing and Financial Services episode on the withdrawal of liquid funds, where massive outflow in September was a quarter-end phenomenon that included withdrawals to meet advance tax payment deadlines.

Implications of Liquid Flows

The rapid inflows in the month of October is a strong indication that money markets have started to stabilize after weeks life certainty. Liquidity has improved a lot and as a result of this, money market rates have been coming off from their recent highs. Is this also shows that the funding conditions have been improved for NBFCs that have adversely affected the liquidity? Well, yes but not largely. The top NBFCs, with strong parentage, will remain key beneficiaries as improved liquidity shift towards strong and quality names.

What Should You Do?

Following the trend, you too must invest in via SIP wherein a fixed amount of money can be invested in a scheme periodically at fixed intervals. It can be initiated via Rs 500 per month and offers the advantage of rupee cost averaging and compounding in the long run.

If you are cautious about picking up a scheme for yourself, leave the task in the hand of experts working for MySIPonline. All you need to do is call (+91-9660032889) or email us ( support@mysiponline.com)  and we will help you with a customised portfolio.

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