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Synopsis: LIC Mutual Fund is reducing its minimum SIP investment thresholds to Rs 100 for daily SIPs and Rs 200 for monthly SIPs, effective October 7, 2024. This initiative, supported by Sebi, aims to boost financial inclusion by enabling more investors to participate in mutual fund investments with lower amounts. The fund house is targeting a significant increase in its assets under management, with an ambitious goal of reaching Rs 1 trillion by FY26.
LIC Mutual Fund has announced plans to reduce the minimum investment amounts for its Systematic Investment Plan (SIP), aimed at making mutual fund investments more accessible. The fund house plans to lower the minimum daily SIP investment from Rs 300 to Rs 100, and the monthly SIP minimum from Rs 1,000 to Rs 200. This move comes as the Securities and Exchange Board of India (Sebi) has been promoting smaller SIPs to encourage broader participation in mutual funds.
The new SIP thresholds are expected to take effect by October 7, 2024, once LIC Mutual Fund files the necessary addendum. This initiative aims to attract a larger pool of investors, especially those from lower-income groups or first-time investors. According to R.K. Jha, Managing Director and CEO of LIC Mutual Fund, the company is working with KFintech Service to implement these changes and believes that this will help in increasing its assets under management (AUM), with the goal of reaching Rs 1 trillion by FY26 from the current Rs 35,000 crore.
The introduction of micro-SIPs aligns with Sebi's broader strategy to enhance financial inclusion by allowing individuals to invest small amounts over time. Experts believe that reducing the minimum SIP amounts will allow more investors, such as students, daily wage earners, and others, to participate in wealth creation. It provides a more accessible entry point into mutual funds, enabling the broader population to experience the benefits of systematic investing and compounding returns. For instance, by investing as little as Rs 250 per month over 25 years, investors could potentially accumulate over Rs 6 lakh, assuming an annual return of 14%..
