SIP mutual fund flows must continue to grow irrespective of the temporary setbacks in the equity market volatility said N.S. Venkatesh, CEO of AMFI (Association of Mutual Funds in India), in an interview.
In one way, the equity market volatility is good, and SIP (systematic investment plan) is a great tool to aid investors to get through that volatility, said the AMFI CEO.
Investors must consider SIP as the “first port of call” and utilize to create long-term wealth. Mr. Venkatesh feels that it is difficult to time the market on a continual basis.
He added that SIP mutual fund flows must continue to increase in the long run irrespective of the conditions of the market, provided investor awareness is created through various programmes. The long-term trend will continue even though there may be few temporary setbacks in case of sharp market crashes.
He thinks that the recent cut in TER (total expense ratio) of mutual funds by SEBI (Securities and Exchange Board of India) has come at the correct time. Also, the market regulator has taken the right step in making sure that the TER structure is improved. The regulator’s eventual objective is to protect the interest of the investors and the development of the market. AMFI also aims to deliver the same quality of service to the investors.
The flows of some categories may initially get affected by the all-trail model of distributor compensation. However, it will get “streamlined over a period of time.” Also, the all-trail model makes sure that the churn is reduced and the investors continue the mutual fund for the long term, said the AMFI CEO, during an interview with The Economic Times.
Monthly SIP mutual fund flows have more than doubled over the past two years and have reached about 7,658 crore Rupees, despite the market correction in this financial year, according to Live Mint. Moreover, SIPs have shown a remarkable effect on Nifty and Sensex.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]