Sip by
sip: That’s how the average Indian had a taste of equities in the past couple
of years. But the steady road to riches, which involved monthly mutual fund
purchases of a fixed amount, suddenly seems a bit rocky to many of them, who
are beginning to look at mark to market losses as many stocks head south.
SIP
investors are losing in 78 of 137 equity mutual fund schemes, with the average
loss at 1.5 per cent for two years. The loss is higher in mid/small-cap funds
at 6 per cent, although in large-cap funds, they are gaining 1.5 per cent. Over
longer tenures like three and five years, they are still in the black, by 5.21
per cent and 10.28 per cent, respectively.
While
most investors are not disturbed by the near-term volatility, distributors said
that many new investors who came in for the first time seeing the returns of
2016 and 2017 are now feeling worried about these investments.
Investors have been pouring
money into equity mutual funds through the SIP route. In December 2018,
inflows through SIPs touched an all-time high of Rs 8,022 crore, a four-fold
jump from Rs 1,916 crore in March 2015. Investors should continue with
their SIPs and not worry as downturns help accumulate a higher number of units.
This will help create wealth when the market cycle turns upward
Distributors
point out that equity is a volatile asset class and would not give linear
returns like a fixed deposit. They point that most SIPs are done by investors
for the long term to meet their long-term goals such as children’s education, buying
a house, or planning for their retirement.
Equity
returns are not consistent year on year. If you have done an SIP to meet a goal
with a time frame of five-seven years, you should not worry about low returns
over a two-year period
SIPs have been gaining
popularity among Indian MF investors as they help in rupee cost averaging and
also in investing in a disciplined manner. Investors can start with as little
as Rs 100 per month and have the flexibility to increase/decrease or stop
without any penalty.
AMFI data showed that the MF industry had added about 9.46 lakh SIP accounts each month on an average during 2018-19, with an average SIP size of about Rs 3,150 per SIP account. Investors have poured in Rs 88,667 crore through SIPs in equity mutual funds in the calendar year 2018.
AMFI data showed that the MF industry had added about 9.46 lakh SIP accounts each month on an average during 2018-19, with an average SIP size of about Rs 3,150 per SIP account. Investors have poured in Rs 88,667 crore through SIPs in equity mutual funds in the calendar year 2018.
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