MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS !

Indian Mutual Fund industry’s Avg. Assets Under Management (AAUM) crosses Rs.16.8 Lakh Crore (INR 16.8 Trillion) – an all time high!

Average Assets Under Management (AAUM) of Indian Mutual Fund Industry for the month of October 2016 has crossed Rs. 16.8 lakh crore, while the Assets Under Management (AUM) as on October 31, 2016 has crossed a landmark of Rs. 16 Lakh crore and stood at Rs.16.30 lakh crore…the highest ever AAUM/ AUM, so far.
The AUM of the Indian MF Industry has grown from Rs. 3.26 trillion as on 31st March 2007 to Rs. 16.30 trillion as on 31st October, 2016, which is the highest AUM ever … a five-fold increase in a span of less than 10 years !!
The MF Industry’s AUM has more doubled in the last 4 years from Rs 5.87 trillion as on 31st March, 2012 to Rs. 12.33 trillion as on 31st March, 2016
The Industry’s AUM had crossed the milestone of Rs10 Trillion (Rs.10 Lakh Crore) for the first time in May 2014 and in a short span of two years the AUM size has crossed Rs.15 lakh crore last month.
The total number of accounts (or folios as per mutual fund parlance) as on October 31, 2016 stood at 5.13 crore (51 million), while the number of folios under Equity, ELSS and Balanced schemes, wherein the maximum investment is from retail segment stood at 4.1 crore (41 million).
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Mutual Fund SIPs accounts cross 1 CRORE mark !

Mutual Fund SIPs accounts cross 1 CRORE mark ! And the total amount collected through SIP during September 2016 was close to Rs.3700 crore.

Indian Mutual Funds have currently about 1.13 crore (11.3 million) SIP accounts through which investors regularly invest in Indian Mutual Fund schemes.
Systematic Investment Plan or SIP as it is commonly known, is an investment plan (methodology) offered by Mutual Funds wherein one could invest a fixed amount in a mutual fund Scheme periodically at fixed intervals – say once a month instead of making a lump-sum investment. The SIP instalment amount could be as small as Rs.500 per month. SIP is similar to a recurring deposit where you deposit a small /fixed amount every month.
SIP is a very convenient method of investing in mutual funds through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time.
SIP has been gaining popularity among Indian MF investors, as it helps in Rupee Cost Averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.
AMFI data shows that the MF industry has been adding about 6 lacs SIP accounts each month on an average during the current financial year, with an average SIP size of about Rs.3,300 per SIP account.

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Systematic Investment Plan ?

If you’ve invested Rs.1 lakh in Sensex on 1’st January 1990 and did not disturb it until 30^th November 2015 (26 years, 25.91 to be precise) it would have multiplied 33 times and become Rs.33.38 lakhs. This works out to an annualized return of 14.49%.

We saw that over 26 years Sensex got multiplied by 33 times. Let us assume you missed the best 40 days spread over the above 26 year period. Then your money would have multiplied by mere 2 times instead of 33 times. 40 days over 26 year period is just 1.5 days per year! So hopping in and out of the market can dent your returns very significantly. Regular investing and staying for a long time (which would include the best days as well) is the way to build sustainable wealth.

Please see the complete data below:

Stayed invested for 26 years: 33times, 14.49% per annum

Missed 10 best days: 12 times, 10.14% p.a

Missed 20 best days: 6 times, 7.22% p.a

Missed 30 best days: 3 times, 4.75% p.a

Missed 40 best days: 2 times, 2.54% p.a

It is clear that if you’ve even missed the 10 best days, instead of getting 33 times your wealth, you would have got only 12 times. Just missing 10 best days in nearly 3 decades costs you so much.

It is interesting to note that by just missing 10 or 20 best days over 26 year period; market gives you only fixed deposit kind of return.

For missing 30 or 40 best days; you just get savings bank account returns.

Markets tend to go up sharply on a few days, then consolidate for long periods and then go up sharply again over a few days. So just missing these days can bring down your returns drastically. It is impossible to predict the best days in advance and we would come to know of the same only in hindsight.

I also read somewhere that some of the best days of the markets come immediately after its worst days. It looks like many a time the worst and best days are lumped together in a short period of time.

There is no way to prevent worst days and time the best days.

Not many get rich from stock markets because they lack patience, hop in and out, losing many of the best days.

So don’t try to time your entry into the market. SIP is the way. What matters is how long you stay invested so that you catch as many best days as you can and maximize your returns.

Start early. Invest regularly. Stay the course. Get wealthy.