Why are systematic investment plans becoming popular? Analysis reveals massive growth in one year
The Indian mutual fund industry continues to experience impressive growth thanks to the growing interest of retail investors in participating in the capital markets. Growth is being driven by a huge increase in mutual fund SIPs. According to an analysis by Nivesh.com, AUM SIP reached an all-time high of Rs. 4.83 lakh crore at the end of June. Over the past year AUM SIP has grown by 60% and doubled from just Rs. 2.05 lakh crore in June 2018.
The analysis indicates that the new monthly SIPs registered recorded a new high of 21.29 lakh in June 2021, compared to only 9.13 lakh in June 2020. As a result, the total of SIP accounts in the last three years has increased. to 4.02 crore as of June 30, 2021., from 2.16 crore in April 2018. This is important because the number of SIPs registered during the 25-year period 1993 to 2018 was almost replicated in just three years ( 2018-2021).
Why are SIPs growing in popularity?
According to Nivesh.com, SIPs gained popularity among Indian savers as they realized that bank interest rates were going down, that long-term inflation-adjusted top returns could only come from mutual funds. shift.
Based on their goals and risk appetite, small savers have shifted their savings to mutual fund SIPs. It also helps in averaging rupee costs and disciplined investing without fear of market volatility and market timing.
In terms of overall growth in assets under management, assets under management of equity plans increased by 55% to Rs. 11.27 lakh crore over the past year, aided by growing markets. Debt-focused programs also remained popular with risk-averse investors. Debt plans represent 43% of assets under management, up 12.4% over the past year.
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Additionally, hybrid schemes have an AUM of Rs. 3.87 lakh crore, which is 12% of total assets under management as of June 2021. These funds have grown by 29% in the past year. Hybrid funds are funds that invest in a combination of stocks and debt.
Another distinct trend has been the huge interest in investing in foreign markets.
Funds of funds (FOFs) investing overseas saw massive growth of 357% last year from a low base of Rs. 3,904 crore in June 2020 to Rs. 17,864 crore in June 2021.
Index funds and ETFs also continued to attract investor interest:
Index funds create a portfolio that tracks a stock index. These plans have Rs. 24,947 crore in assets under management as of June 2021. These funds have seen phenomenal growth of 123% in the past year.
Gold ETFs are exchange traded funds with gold as the underlying asset. These represent 0.5% of total assets under management and have grown by 50% over the past year.