Mutual Fund SIP: The number of people investing in mutual funds through Systematic Investment Plan (SIP) is increasing continuously. In such a situation, if you are also thinking of investing in mutual funds through SIP in the coming time, then there is good news for you. SEBI Chairperson Madhabi Puri Buch said that the minimum amount of mutual fund SIP can soon be reduced to Rs 250. Currently, most mutual fund schemes give investors an opportunity to start investing through SIP from Rs 500, which is the minimum amount. Madhabi Puri Buch recently said that even a Starbucks coffee does not come for Rs 250, in such a situation, this micro SIP can benefit crores of people. Let us know what micro-SIP is and what the industries have to say about it?
What are micro-SIPs and who are they for?
Micro-SIPs are a cheaper alternative to traditional systematic investment plans. Investors need to make monthly contributions of only ₹50 to ₹100, while a traditional SIP requires a minimum of ₹500. Micro-SIPs are designed for investors with smaller corpus, including rural residents, daily wage earners and students. Aditya Birla Sun Life Mutual Fund is reportedly developing the country’s first ₹250 per month SIP. According to the Association of Mutual Funds in India (Amfi), there were a total of 9.3 crore SIP accounts in July, with total SIP outlay of Rs 23,332 crore.
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Why does SEBI want to change the size?
The idea is to democratise the country’s wealth creation process – like selling shampoo in small sachets. Market participants believe this is a good start for financial inclusion as today’s small investors can be tomorrow’s big ticket investors. With digitisation touching almost every corner of the country, the market regulator wants to leverage India’s existing digital public infrastructure to provide accessible investment opportunities to even the smallest investors. The Sebi chief emphasised on better use of technology to make the process of connecting and servicing investors more efficient.
Is Micro-SIP a new concept?
Micro-SIP is not a new concept. Many mutual funds offer SIPs that require a minimum contribution of ₹50 to ₹100 per month. But none of them offer ₹250 per month SIP. Navi AMC also offers mutual funds with SIP options as low as ₹10 per month. With the introduction of this new level of corpus, SEBI wants to provide an investment plan that caters to everyone.
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What benefits could this step bring?
Micro-SIP will enable the smallest investors to connect with the financial markets. Its aim is to reach this scheme to as many people as possible and make it more accessible to investors. Also, a large and diverse base of investors will also be good for asset management companies. Let us tell you that in early July, Buch had said that in the next 3 years, the number of investors investing in mutual funds through SIP by investing less than Rs 250 per month is increasing. At an event of SBI Mutual Fund, he had said, “SIP of Rs 250 will not only be real, but it will also be extremely beneficial for our industry.”
