Buch spoke at the event organised by SBI Mutual Fund, India’s largest mutual fund, commemorating the fund house’s milestone of reaching Rs 10 lakh crore in assets under management (AUM). “The Rs 250 SIP would not only be real, but it would be hugely profitable for our industry. We will see financial inclusion along with profitability of the industry; that is my belief,” Buch said. “The magic is sachetisation of MF products and that’ll lead the growth of the Indian MF industry in the next three years,” she added.
Most fund houses have sips that mandate a minimum investment of at least Rs 1,000 a month. Some fund houses allow Rs 500 SIPs, only a handful of fund houses allow investors to invest with as little as Rs 100 a month. Buch acknowledged the fact that presently, it is financial unviable to run such micro-sized SIPs at a large scale. But technology, she added, would bring this cost down in future.
“Technology, so far, has enabled cost reduction; we fail to recognise and celebrate. The idea really is bring down the cost, so that the bottom of the pyramid (investors with lower income, or lower disposable income left to invest) can come into mutual funds,” she said at the event. This, she explained, would lead to a “tremendous growth of the Indian mutual fund industry.”
Investors in mutual funds get to invest either through making a lumpsum investment or through SIPs. The SIP inflows in mutual fuds have seen a phenomenal growth over the years. In the month of June, Rs 21,262 crore worth of inflows came into MFs through SIPs, as per data released by the Association of Mutual Funds of India (AMFI; the MF industry’s trade body). As SIPs grow, Buch stressed that the next phase of the SIP growth story will come with bite-sized SIPs; those that enable investors to invest as little as Rs 250 per instalment. To be sure, in as recently as April 2016, SIP inflow was merely Rs 3,122 crore a month.
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