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SIP Investment: Significant volatility persists in the stock market. Despite this, retail investors continue to invest through SIPs. Recent data from AMFI reflects this trend; SIP inflows remain robust even during market downturns. Experts observe that this has evolved from a mere trend into an investment habit.

Focus on the Long Term, Not Market Timing

Akhil Chaturvedi, Executive Director and Chief Business Officer at Motilal Oswal Asset Management Company, notes that people now view SIPs as a vehicle for long-term savings rather than just a means to seek short-term returns, as was the case previously.

He pointed out that only 6% of household assets in India are invested in equities, compared to approximately 48% in the US. This indicates significant scope for the growth of equity investments in India. He also mentioned that while valuations in certain sectors are high, the market as a whole does not appear to be overvalued.

Why Are Funds Flowing into Small-cap and Thematic Funds?

Investments in small-cap and thematic funds have steadily increased over the past few years. Investor confidence remains intact despite concerns regarding valuations.

Year    Small-cap Funds    Thematic Funds
2023    ₹43,291 crore    ₹31,744 crore
2024    ₹34,874 crore    ₹1,76,915 crore
2025    ₹52,321 crore    ₹38,145 crore

Akhil Chaturvedi states that investors use these funds to gain exposure to high-growth companies. He believes that valuations should be assessed on a stock-by-stock and sector-specific basis rather than evaluating the entire category as a whole.

Rising Number of New Investors from Smaller Cities

The number of new investors from Tier-2 and Tier-3 cities is rising rapidly. Young investors, in particular, are increasingly adopting market-linked investment products. Akhil Chaturvedi says that SIPs are no longer just investments for a bull market; they are gradually becoming a habit for long-term wealth creation.

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