LIC Mutual Fund is considering lowering the minimum daily SIP investment limit to Rs 100 from the current Rs 300 to attract a larger number of investors. Additionally, there are plans to decrease the monthly minimum SIP investment level to Rs 200 from Rs 1,000. The micro SIP was recently announced by the market and investment regulator Sebi aims to improve access to mutual fund investments in India. Over the next three years, a larger number of individuals will be able to invest in mutual funds through micro SIPs with a minimum amount of Rs 250 a month.
At an event, RK Jha, Managing Director and CEO, LIC Mutual Fund, said the AMC is working with registrar KFintech Service and will file an addendum early next month to reduce minimum daily and monthly SIP limit of Rs 100 and Rs 200. He added this step will help the fund house to reach out to those sections of the society which have not benefited from the equity market boom.
He further added the fund house is targeting to grow its asset under management from Rs 35,000 crore to Rs 65,000 crore by the end of this fiscal and further to Rs 1 lakh crore by the end of FY26. He was at an event in Mumbai to launch an NFO on manufacturing fund.
As per experts, the Rs 250 Systematic Investment Plan (SIP) will bring in an opportunity for a wider range of Indian individuals to engage in mutual fund investments. This reduction in the initial investment requirement by Sebi aims to encourage more of our population to contemplate mutual funds as a viable investment avenue.
This initiative is in line with one of the main goals of mutual funds, particularly in the Indian setting, which is to provide access to a variety of stocks and bonds with relatively low investment amounts. Mutual funds aggregate investments from multiple investors, granting them access to a diversified array of securities that might be difficult for individual investors to construct on their own. The Rs 250 SIP expands on this principle, potentially making professional fund management and diversified portfolios more accessible to a broader audience.
“The Rs 250 SIP will not only be real, hugely profitable for industry, therefore we will see financial inclusion, along with increased profitability because that’s what we do in India…The magic is in the sachetisation of our products; Just like we have sachetised versions in FMCG products, SBI MF is going to make this happen. The objective is to make citizens participate in the wealth creation of the country and create avenues for capital formation,” Sebi chief Madhabi Puri Buch said in July.
Consistently investing, even with small amounts, can significantly impact your financial portfolio over time. This strategy allows you to start investing without the need for a large upfront sum of money. For example, by investing Rs 250 monthly in a Micro SIP for 25 years, totaling Rs 75,000, you could potentially see this amount grow to around Rs 6 lakh with an expected annual return of 14%. The growth of this investment, compared to the initial amount invested, can be a valuable asset for future financial needs such as retirement planning or unexpected expenses.
“Micro SIP is a good initiative to drive further participation from small investors, students, house helps and another low earning group. This will also help in the broader financial inclusion of this segment of investors. This set of investors have been away from the market and have not experienced the power of compounding which comes with SIP. Most of these investors do chit funds, daily investments in unorganised credit societies, with this move their investment will start flowing into organised mutual funds,” Nitin Rao, Head product and preposition, Epsilon Money Mart, told Business Today.
Read More: LIC Mutual Fund to scale down minimum daily SIP limit to Rs 100, monthly SIP cap to Rs 200