SIPs Proposed Features of Sachetised Mutual Funds by SEBI

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