Despite salary cuts and job cuts, the inflows into equity mutual funds and SIPs was rather steady in the month of April 2020. Systematic Investment Plans or SIPs continued to attract decent investment.
SIP inflows were pegged at Rs 8,376 crore for the month of April from Rs 8,641 crore in March, 2020, which is a marginal decline.
Inflows into equity mutual funds dropped to Rs 6,108 crore in April amid uncertainty triggered by the COVID-19 crisis.
Investors keep the faith in SIPs
Despite the covid 19 infection, lockdown and salary cuts, SIP inflows have barely reduced. Investors continued to have faith in equities, which is a sign of immense maturity that is required when investing in equity and equity mutual funds.
In fact, if an investor discontinues now, it would be a big harm that they would be doing to their portfolio, given the fact that NAVs are probably near the lowest levels, we have seen in years. It makes sense to invest more at these levels and sell when the markets are at peak. Of course, this is only possible if investors have that kind of income stream, given the current economic chaos of salary cuts and job losses.
It's not only a good time to continue investment in equity mutual funds, but, to also increase the size of SIPs, if one can afford that. In fact, it may not be a bad time to also switch from debt mutual funds to equity mutual funds, as in the longer period of say 3-5 years, you might end-up with stupendous returns.