Are volatile markets spooking SIP investors?

First-time investors are having a rough ride in mutual fund SIPs, many are yet to see profits.

Time seems to be running out and investors are turning impatient. And if mutual fund distributors are to be believed, the hugely successful campaign of ‘Mutual Funds Sahi Hai’ run by the Association of Mutual Funds of India (Amfi) doesn’t seem to be cutting ice with many investors these days. What’s the fuss?

Although a little over than Rs 8,000 crore came into mutual funds (MFs) through systematic investment plans (SIPs) in the month of December 2018, the pace of inflows has slowed down. As per data given to us by industry officials who did not wish to be quoted, the MF industry got just 7.58 lakh new SIPs in November 2018 and 7.23 lakh new SIPs in December 2018. Between May and September 2018, the average new SIPs added every month was 10 lakh. A total of 5.36 lakh SIPs got discontinued in December 2018, up from 4.44 lakh SIPs in November 2018 and 4.66 lakh SIPs.

As per Computer Age Management Services (CAMS; one of India’s largest registrar and transfer agents in the MF industry), the MF industry registered 5.50 lakh new SIPs in the month of November 2018; the lowest in the past 13 months and a drop of nearly 30 percent since the previous month.

Why are investors at the exit gate? Investors that invested in MF through SIP in the past three or so years are still either sitting on losses or have earned abysmal returns. As per a Moneycontrol-Crisil Research Study, if you had started a SIP in the 20 largest equity funds a year ago, you’d be sitting on a loss of about 6 percent.

Mid and small- cap funds were the worst hit. A SIP in HDFC Mid-Cap Opportunities Fund would have yielded you a loss of 14 percent and a SIP in Franklin India Smaller Companies Fund started a year ago would have yielded you a loss of 22 percent.

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