Can a 250 rupee SIP make Mutual Fund Investing more accessible?
The landscape of mutual fund investing in India is continually evolving, potentially making it more accessible than ever before. Mutual Funds in India currently have more than [1]9.5 Cr SIP accounts, enabling investors to contribute to a variety of schemes.
Over the years, mutual funds have played a crucial role in democratizing investments, thanks in large part to low-ticket SIPs.
The 250 rupee SIP may have the potential to increase the investor base, promoting financial inclusion across India. It may be considered an impactful move for both individual investors and the mutual fund industry.
As communicated by AMFI, there are approximately 4.9 crore unique mutual fund investors. The SIP amount of 250 rupees could attract a wave of first-time investors. As of Aug 2024, the total number of SIP accounts stood at around [2] 9.6 crore, accounting for [3] 47% of total industry folios. An impressive [4] 3 crore new SIPs have already been registered this financial year, a figure that may be poised to grow even further if the INR 250 SIP option rolls out.
Small-ticket SIPs of INR 250 may encourage a wider audience to begin their investment journeys. This move may foster a culture of saving and disciplined investing among individuals who previously may have felt that financial markets were out of reach.
The availability of SIPs with a smaller investment size may help bring in a large, untapped segment of the population, making mutual fund investing more inclusive.
The potential for growth is particularly notable in Tier-2 and Tier-3 cities. From March 2018 to March 2024, the share of mutual fund AUM from Tier-3 cities grew [5] from 8% to 19%. With the introduction of the 250 rupee SIP, this contribution may rise even further, opening doors for a broader section of society to access mutual funds.
At Zerodha Fund House, we are committed to making investing simpler and more accessible for everyone. In line with this mission, we launched our first index fund - Zerodha Nifty LargeMidcap 250 Index Fund with a minimum investment starting at just INR 100. This aligns perfectly with the ongoing efforts to lower entry points for investors, allowing even more people to benefit from long-term investing habits. You can explore this scheme here.
The 250 rupee SIP may further ease entry for investors and help them participate in the capital markets, contributing to their financial well-being.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully
Please note that this article or document has been prepared on the basis of internal data/ publicly available information and other sources believed to be reliable. The information contained in this article or document is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party in any manner. The article does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article or document.
Source:
[1], [2], [4] AMFI Mutual Fund Data
[3] AMFI Monthly Note Aug 2024
[5] Indian Capital Markets Report
