According to JM financial report, net inflows into equity mutual fund schemes were down 23% on a month-on-month basis in December 2018 at Rs 6,700 crore. "Unlike November 2018 when liquid mutual fund schemes witnessed strong inflows, liquid mutual fund schemes saw large outflows of Rs 1.5 trillion (Rs 1.5 lakh crore) in December 2018, while debt mutual fund schemes witnessed outflows worth Rs 3,400 crore in December 2018," the report said. However, inflows through the Systematic Investment Plan (SIP) were strong in December at Rs 8,020 crore.
Mutual Funds received Rs 8,233 crore through systematic investment plans (SIPs) from the retail investors in December 2018. The SIP inflows registered a growth of 3.10% over the preceding month. SIP inflows stood at Rs 7,985 crore in November. However, total asset under management (AUM) of the industry declined by 5% to Rs 22.85 lakh crore in December as against Rs 24 lakh crore in November.
An investor can opt for a lumpsum investment or Systematic Investment plan (SIP) in equities and equity MFs. SIPs capture the wide fluctuations in the equities which do not grow in a linear way. SIPs average out the cost of investment and accumulate more units over longer periods. This concept is called rupee-cost averaging. Unlike equities, in case of debt funds or any other fixed income instrument, lumpsum investment is preferable to a staggered one (FD v/s Recurring deposit) since the return rises in a linear way. Higher the investment at the lower point, higher will be the return.