New Delhi, Mar 11 :
The fall in the equity market indices has pulled down the total assets under management (AUM) of mutual fund companies that come through systematic investment plans (SIPs).
The AUM of SIP fell to Rs 3.11 lakh crore in February, compared to Rs 3.24 lakh crore from a month ago, according to data from Association of Mutual Funds in India (AMFI).
AUM is the total market value of the investments that mutual funds handle on behalf of investors.
AUM fluctuates daily, reflecting the flow of money in and out of a particular fund and the price performance of assets.
Last month, the BSE Index fell little over 6 percent which impacted the overall AUM, as per mutual fund officials.
However, the silver lining was the rising trend in SIP folio additions. In February, the mutual fund industry added 5.65 lakh new SIP folios.
Currently, there are about 3.09 crore SIP folios through which investors regularly invest in schemes.
During the review period, total inflows remained steady at Rs 8,512 versus Rs 8,532 in January.
SIP monthly contributions have breached the Rs 8,000 crore-mark for the 15th consecutive month.
In the current financial year (2019-2020), the total inflows through SIPs stood at Rs 91,442 crore.
AMFI data shows that the MF industry had added, on an average, 9.81 lacs SIP accounts each month during the FY2019-20, with an average SIP size of about Rs 2,800 per account.
Overall, the AUM of the mutual fund industry fell marginally to 27.23 lakh crore in February as against 27.85 lakh crore a month ago.
What is SIP?
SIP is an investment method offered by mutual funds through which one could invest a fixed amount in a mutual fund scheme periodically at fixed intervals – say once a month — instead of making a lump-sum investment.
An SIP instalment amount can be as small as Rs 500 per month. SIP is similar to a recurring deposit where you deposit a small/fixed amount every month.
It is a very convenient method of investing in mutual funds through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time.
SIP has been gaining popularity among Indian MF investors, as it helps in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.
SIPs help the investor average his cost over a period of time, fetching more units when prices are low and fewer units when prices are high.
