Context:
The Securities and Exchange Board of India (SEBI) hopes to increase the participation of mutual funds mainly among low income groups by providing a sachetized mutual fund product through small ticket.
Systematic Investment Plans SIPs Proposed Features of Sachetised Mutual Funds
- Small Ticket SIPs
- Minimum investment amount of 250 per SIP.
- Aims
- Aims to render investments in mutual funds accessible to the broader population with a focus on those who lack significant financial resources.
- Mutual Fund
- A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio. Investors buy shares in mutual funds.
Eligibility Criteria for Schemes
- Most mutual fund schemes except
- Debt schemes
- Sectoral and thematic schemes
- Small cap and mid cap equity schemes
- Reason for the Proposal
- Deepening of Financial Inclusion
- Facilitates the entry of low income individuals.
- Induces small periodic savings and helps in cultivating the habit of saving.
- Bigger Investors’ Base
- Reaches mutual funds to unexplored so far.
- Is in line with the initiatives of SEBI to enlarge the retail participants in the capital markets.
Challenges to Keep in Mind
- Operational Costs
- Co-management of smaller ticket size may raise the administrative cost of mutual fund houses.
- Education and Awareness
- Effective outreach will educate the low income groups about the benefits and risks of investments in mutual funds..
Source: The Hindu
