Bombay Stock Exchange (BSE)
A man walks past the Bombay Stock Exchange (BSE) building in Mumbai, India, July 15, 2015.Reuters

Investments through systematic investment plans (SIP) in Mutual funds jumped about nine percent in May from April to reach an all-time monthly record of Rs 7,304 crore. It is in contrast to a dip registered in the first month of the financial year (FY) 2019.

The rise has come after collection through SIPs plunged to Rs 6,690 crore in April as against Rs 7,119 crore invested in the last month of previous FY. May was a volatile month for the equity-linked SIPs, with events like Karnataka elections, rising oil prices and hardening bond yield infusing high volatility in the markets. 

Most SIPs were sold in the equity and balanced funds segment. Over the years, monthly SIP collections have increased from Rs 1,206 crore in March 2014 to Rs 2,719 crore in March 2016 and Rs 7,304 crore in May 2018. There has been a 53 per cent rise in overall collection of SIPs in FY18 as compared to FY17.

The overall SIP collection for the financial year 2017-18 stood at Rs 67,190 crore, compared with Rs 43,921 crore in the previous year.

Indian markets have registered a change in the investment pattern, with new entrants in investors segment. Domestic investors nowadays have more option for their saved money as the banks have not been able to provide them with attractive returns.

Poor returns in the competing asset classes such as gold and real estate have forced the retail investors to invest in SIPs in a big way over last 3 years. Moreover, earlier only handful independent financial advisor, banks and national distributors sold mutual funds, but recently new stream of a stockbroker is also selling mutual fund SIP.

Despite a correction in the markets, investors have not stopped their SIPs, on a contrary, they have invested more. Some of the mutual funds have performed better than the benchmark index over last three years. Aggressive advertisement campaigns and educating investors across the country on the importance of long-term investing money have shown positive results for the industry. 

An investor can start SIPs, both online and offline, for as low as Rs 500. There is flexibility to start or stop a SIP and top it up at any point in time. There is also no penalty on early closures.