Page 26 - Banking Finance September 2024

ARTICLE

Current Trends

in Mutual

Funds

Systematic Investment Plans (SIPs) have become one of the most popular investment strategies
among Indian retail investors, offering a disciplined approach to wealth creation. SIPs allow
investors to invest a fixed amount regularly (usually monthly) in mutual funds, thus averaging out
the cost of investment and mitigating the impact of market volatility.

T he mutual fund industry in India has experienced have witnessed remarkable growth in India, driven by

increased investor awareness, the convenience of
significant growth over the past decade, evolving
in response to changing investor preferences,
mutual funds.
technological advancements, and regulatory automated investments, and the rising popularity of equity
developments. Three key trends have emerged as
particularly influential in shaping the landscape of mutual Key Drivers of SIP Growth
fund investments: the growth of Systematic Investment 1. Financial Inclusion and Awareness: The growth
Plans (SIPs), the rise of passive investing through index of SIPs can be largely attributed to the increasing
funds and Exchange-Traded Funds (ETFs), and the financial literacy among Indian investors. Initiatives
transformative impact of digital platforms. This article by regulators like the Securities and Exchange Board
delves into these trends, analyzing their drivers, impact, of India (SEBI), as well as efforts by mutual fund
and future prospects. companies and financial advisors, have played a
crucial role in educating investors about the benefits
Growth of SIPs in India of SIPs. Campaigns like "Mutual Funds Sahi Hai"
have demystified mutual fund investments,
Systematic Investment Plans (SIPs) have become one of
the most popular investment strategies among Indian retail encouraging a larger population to participate in SIPs.
investors, offering a disciplined approach to wealth 2. Rupee Cost Averaging: One of the key advantages
creation. SIPs allow investors to invest a fixed amount of SIPs is rupee cost averaging, which allows
regularly (usually monthly) in mutual funds, thus investors to buy more units when prices are low and
averaging out the cost of investment and mitigating the fewer units when prices are high. This strategy helps
impact of market volatility. Over the past decade, SIPs in reducing the overall cost of investment and

24 | 2024 | SEPTEMBER | BANKING FINANCE