Investing in SIP
The enthusiasm of retail investors in India’s equity market is continuously increasing. Whether there are fluctuations in the market or low returns, people do not stop investing in SIP. The total SIP contribution reached around Rs 30,000 crore in November alone, which shows that common investors are now developing a long-term understanding. In an ET report quoting experts, it was said that this is a sign of increasing maturity and smart financial discipline of investors.
Why increase in SIP despite low returns?
The equity index gave a meager return of just 13% in November, but despite this, SIP inflows increased by almost Rs 400 crore month-on-month. Experts say that investors have now understood that SIP is not a reaction to market movements but a discipline, that is, they continue investing even if the market falls, and even if it rises because this method gives the best returns in the long run.
Are SIP cancellations raising concerns?
However, it is important to keep an eye on one thing. In the last two months, SIP cancellations have been seen more than usual. For example, October saw 60 lakh gross registrations, but only 15 lakh net additions, while September saw 57 lakh gross registrations, but only 1314 lakh net additions. This means that new investors, who get scared by small falls in the market, are closing their SIPs midway.
Why did inflows into gold funds decrease?
There was good inflow into gold funds for the last few months, but there was a decline in it in November. According to experts, many investors booked profits, there are mixed sentiments regarding gold prices. Some investors are anticipating a fall in prices, while some are still bullish, hence inflows remained weak.
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The increasing craze of thematic funds
In the last two to three years, thematic funds with defence, consumption, passive and international themes have become very popular. Last year alone, more than 100 new thematic NFOs were launched. But experts have clearly warned that do not make thematic funds the main part of the portfolio because concentration risk is high in them. In a diversified fund you can take advantage of good themes without increasing the risk. He reminded that the infra theme had grown very rapidly during 2003-05, but its performance remained weak for many years thereafter.
Increased confidence in midcap-smallcap
Midcap and smallcap funds also saw higher inflows in November. Even though their performance last year was average, investors are linking them to India’s rapidly growing economy. Experts believe that large caps are not able to fully represent India’s growth. Many emerging sectors are found in mid-smallcap only, hence SIP is an excellent entry strategy for them.