SEBI Chief Promotes Small Sized SIPs for attracting More Investors; Know Details Here
Over the next three years, more people will be able to invest in mutual funds through Systematic Investment Plans (SIPs) starting at Rs.250 a month, says SEBI Chairperson Madhabi Puri Buch. She made this announcement at an SBI Mutual Fund event, celebrating its achievement of Rs.10 lakh crore in Assets Under Management (AUM).
Buch believes the Rs.250 SIP will be both feasible and profitable, driving financial inclusion and industry growth. Currently, most fund houses require a minimum SIP of Rs.1,000 a month, with a few allowing Rs.500 and fewer still permitting Rs.100. While managing small SIPs is not currently cost-effective, Buch expects technology to lower these costs in the future, making such investments more accessible.
She highlighted how technology has already helped reduce costs, though it often goes unnoticed. By further reducing costs, even those with lower incomes can invest in mutual funds, leading to significant growth in the industry.
Investors can choose between lump-sum investments and SIPs for mutual funds. SIP investments have grown significantly, with Rs.21,262 crore invested in June alone, as per the Association of Mutual Funds of India (AMFI). Buch believes the next wave of growth will come from small SIPs, enabling investments as low as Rs.250 per month. For context, SIP inflows were just Rs.3,122 crore per month in April 2016.
Buch also praised the transparency in the Indian mutual fund industry, citing recent stress tests and disclosures of risk-adjusted returns as examples. This transparency, along with small SIPs, will attract more small investors to the Rs.60 trillion Indian mutual fund industry.
In summary, the push for Rs.250 SIPs by SEBI’s chief aims to make mutual fund investments more accessible. With technology reducing costs and a focus on transparency, this initiative is expected to drive significant growth in the Indian mutual fund industry, benefiting both the industry and investors.
