Among average Indian mutual fund investors, SIP has gained huge popularity. SIP as we know is Systematic Investment Plan. Using SIP, you invest a certain amount of money every month in mutual funds. SIP helps in disciplined investment and benefits you with rupee-cost averaging. You can invest a minimum of Rs. 500 per month and can decide the investing amount. But returns in equity fund has encountered a downturn which is really difficult to take for the new SIP investors.
According to recent sources, the SIP investors has seen loss in small/mid cap funds at around 6%, while those for large-cap funds are gaining at 1.5%. For the past two years, the SIP investors has encountered loss of around 78 out of 137 equity funds which resulted into an average loss at 1.5%. If you consider a longer time period of three to five years, still the equity funds faced loss by approximately 5.21% and 10.28% respectively. The new investors who entered the equity market seeing the good returns of the last two years are really paranoid for the market volatility. But its really good to see that, most of the investors are unmoved by the present market volatility and its return.
As SIP is the most flexible investment instrument, so most investors use this for their equity fund investment. The inflows through SIP has been around Rs. 8,022 crores in December 2018, which is four times in March, 2015 at Rs. 1,916 crores approximately.
Talking about the returns of equity fund, Radhika Gupta, CEO, Edelweiss Mutual Fund mentioned that, “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”.
Usually, investors go for SIP in equity fund to attain long-term financial goal such as- retirement planning, child’s education and marriage. As equity fund have high volatility, you can’t expect good return consistently. Short-term volatility will hit the market and will lower your return. But a considerable time period of 5 to 10 years will give very high return which will help you to meet your investment goal.
In this contrary, Swarup Mohanty, CEO, Mirae Asset Mutual Fund said,”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”.
According to AMFI data, in 2018, the size of SIPs in equity fund has reached up to Rs. 88,667 crores. Also, during 2018-19, the average SIP size was around Rs. 3,150 per SIP account. Approximately, 9.45 lakhs SIP accounts each months has been added in the mutual fund industry.