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Friday, August 4, 2017

'SIP' peaks on Google search, attracts investors from small cities

As stocks scale new highs and return from bank deposits dip, even regions that are not typically known as investor hubs are becoming more and more curious about 'Systematic Investment Plan' or SIP.

The search for the keyword, 'Systematic Investment Plan' (SIP), using the Google search engine has peaked. Contrary to general perception, an overwhelming number of people in states like Jharkhand, Sikkim, and Haryana - where Assets Under Management (AUM) as a percentage of respective state domestic products (SDP) is low - are trying to find out more about SIPs.

According to Google data compiled by ETIG, the search for `SIP' has touched a peak score of 100 - a 5-year high. Google score of 100 indicates peak popularity of a term in a defined time frame.

For instance, the search interest for `SIP' is the highest in Jharkhand among all states, an interest score of 100. The eastern state with per capita investment of Rs 3,830 in mutual funds and Rs 12,600 crore of AUM accounts for 0.6 per cent of the total AUM in the country.

Sikkim -with interest score of 89 for Rs SIP' -has per capital investment of Rs 15,010 in MFs -accounts for 0.1 per cent of the total AUM. Surprisingly, no fund house runs a branch in the state.

The total number of SIP accounts in India has grown at a pace that has shadowed the surge in interest on the product. In the past three years, the number of SIP accounts increased from 68 lakh to 1.45 crore in June 2017.

In the past few months, about 7-7.75 lakh SIP accounts have been added with an average investment size of Rs 3,000 per account, according to the Association of Mutual fund of India (AMFI). The average ticket size of SIPs for the same period last year was around Rs 2,200.

The nature of search on the Internet also reflects the entry of otherwise risk averse new investors who are keen to ride the equity boom. For instance, the interest score of 'top mutual funds' has a high positive correlation with the interest score of Rs SIP.'

Globally, the interest score for the term 'best mutual funds' is the highest in India, followed by unrelated terms such as Rs US' and Rs Canada'.

The total SIP book of local MFs was $736 million in June 2017. During FY 16-17, Rs 43,921 crore was collected through SIPs, which is equivalent to 72 per cent of the total inflow into MFs.

What's driving the growth in SIP investments? Most retail investors have found SIPs to a convenient and relatively safer way to participate in equities without timing the market. Also, the ticket size can be as low as Rs 500 a month.

Source : Economic Times


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