Mutual Funds
Contrary to perception, mutual fund investing through SIPs is not that high

Systematic Investment Plans (SIPs) are a hot sales product, according to common wisdom. However, new folios created through non-SIP products have often been more than those from SIP products 

Systematic investment plans (SIPs) in mutual funds is the great new hope for the fund industry. According to anecdotal reports, SIPs are simply flying. However, a report released by Computer Age Management Services (CAMS), a mutual fund registrar, SIP folios edged ahead of non-SIP folios only for a few months between August 2009-when entry load was banned-and July 2010. Apparently, the increase in SIPs is encouraging for the fund industry as an SIP investment lengthens the period an investor stays invested.



This reduces redemptions from funds when markets are doing badly, as SIP investments would continue for that period.
But over the past three years, the growth in SIP has been very uneven. With the Sensex bouncing back and New Fund Offers (NFOs) on the decline, SIP growth should have increased. This has not happened. All that has happened is that non-SIP folios which were increasing dramatically before the market crashed in 2008, came down sharply. Even then, for a number of months, new non-SIP folios have been well ahead of SIP folios.

If we analyse the chart (above) and focus only on SIP, there has been a slow and uneven growth in SIPs. Normal folio contribution was exceptional from August 2007 to July 2008, hitting highs of around 14 lakh new folios per month. But this changed drastically, after the crash and was just about 3.5 lakh in March 2010. Even then, in all these periods, they were more than SIPs. In late mid-2008 to mid-2009, markets were at a low-hence the decline in new folio creation was expected.

The period of January, February and March normally sees a jump in new folios, which is mainly due to investments made to save tax. In the past year, apart from these three months, the contribution to new folios by SIPs and non-SIPs has almost been at par till July 2010, for which the data is available. Maybe the data of subsequent months will throw more light on whether SIPs have become more popular... or not.

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2G scam: Kanimozhi’s bail plea to be decided today

The 43-year-old daughter of DMK chief M Karunanidhi and Kalaignar TV managing director Sharad Kumar have been charge-sheeted by the CBI for allegedly conspiring with Mr Raja, the key accused in the case

New Delhi: The fate of DMK MP Kanimozhi, charge-sheeted by the Central Bureau of Investigation (CBI) for her alleged role in the second generation (2G) spectrum allocation case along with former telecom minister A Raja, is to be decided today by a Delhi court, reports PTI

Special CBI judge OP Saini, exclusively trying the 2G case, is to pronounce his order on her bail plea along with that of Kalaignar TV managing director Sharad Kumar at or after 1pm.

“It (the order on bail) will take some time, hopefully it will be pronounced by 1pm,” the court said as it assembled for the day in the morning.

The court earlier had reserved its order on their bail pleas for 14th May, but on that day, it had postponed it till today.

The 43-year-old daughter of DMK chief M Karunanidhi and Mr Kumar have been charge-sheeted by the CBI for allegedly conspiring with Mr Raja, the key accused in the case.

She has been charged under the Prevention of Corruption Act for taking bribe through Kalaignar TV—a channel run by DMK—in which a sum of Rs200 crore was routed from Shahid Usman Balwa’s firm DB Realty.

Ms Kanimozhi and Mr Kumar hold 20% stake each in Kalaignar TV while former Tamil Nadu chief minister Karunanidhi’s wife Dayalu Ammal holds 60% share in it.

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