Even when mutual fund industry captains are engaged in furious calculations on the proposed introduction of Rs 250 SIP (Systematic Investment Plan), calling it a micro SIP, Mirae Asset Mutual Fund has stolen the thunder and announced that it is going to slash the minimum SIP in all its funds, except one, to the incredible level of Rs 99. The new rule will come into effect on October 1, according to reports.
Mirae Asset Mutual Fund is one of the most popular AMCs in India. It has a dozen funds in different segments such as equity, balanced advantage, hybrid, fixed income, ETF (exchange traded fund), index and fund of funds. The only fund where Rs 99 SIP will not be applicable is the Mirae Asset ELSS Tax Saver Fund. It will continue to have Rs 500 as the minimum investment in the monthly and quarterly modes.
Affordability to rise
Mirae’s new strategy appears to have great potential since it will make SIPs affordable to a large number of investors overnight, especially at the bottom of the financial pyramid, opening the floodgates for a new category of small retail investors and newcomers to the domain. Earlier, the minimum SIP quantum was Rs 500.
The FMCG approach
“Overnight it will raise affordability and bring SIPs within the reach of a large number of people. Mutual funds are supposed to be retail offerings and, therefore, I don’t believe why the guiding principle of small, affordable packs should be any different from that followed by FMCG brands in shampoo or similar products. I hope it becomes a winner and other fund houses also decide on similar lines,” investment strategist and director, Wishlist Capital Nilanjan Dey told News9live.
Ahead of the industry
Capital market regulator Sebi (Securities and Exchange Board of India) has been advocating a Rs 250 SIP to expand the market for quite some time. The lowering of the entry barrier in the domain of mutual funds is expected to bring categories such as homemakers, students, senior citizens and even daily wage earners – in short people with small income and even those with pocket money. It would, without a doubt, push the cause of financial inclusion, and if it manages to get sufficient numbers, can also raise the flow of funds into the equity markets.
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