Systematic Investment Plan (SIP) investment in stock market based mutual funds has declined significantly in recent times. This has come as a shock to the SEBI system that regulates mutual fund companies and the mutual fund industry.The average monthly SIP investment in equity mutual funds during the financial year 2019-20 was Rs 5,600 crore. It will be Rs. 6,200 - Rs. 6,400 crore.Since then, SIP investment in equity funds has been steadily declining. Between November 2020 and January 2021, the equity fund SIP's net investment fell below Rs 3,000 crore. This is a fall of about 50 percent.
What is the reason for this decline?
Prior to this, individual investors had been investing primarily in mutual fund SIPs. But the curfew has changed investors to keep the corona virus from spreading.They have researched various investments related to investment during the curfew. They have also started putting money into direct equity investment. They are also planning to buy a home as real estate prices have dropped significantly and home loans have fallen by 6.7%.
They have also started investing in fixed deposit and debt funds, such as credit market schemes, with the aim of reducing investment risk. For reasons such as these they may have reduced their investment in equity funds.Next, you have to invest in more NAVs as the market is at its peak. If the market goes down the cash balance may have increased as you can invest at a lower NAV value. Another problem for small investors remains unresolved.