Rs 250 SIP: Kotak Mutual Fund launches Choti SIP to help more investors in wealth creation

Kotak Mahindra Asset Management Company Ltd (KMAMC) has announced the launch of ‘Choti SIP’, a novel initiative to make mutual fund investments more accessible to Indians.

This new offering allows individuals to start investing with a minimal monthly contribution of Rs 250, a move intended to broaden the reach of mutual funds in line with recent guidelines by the Securities and Exchange Board of India (Sebi) and the Association of Mutual Funds in India (AMFI).

By reducing the minimum investment requirement, ‘Choti SIP’ aims to attract a larger segment of the population to the mutual fund market, enhancing financial inclusion across the nation. 

The introduction of ‘Choti SIP’ seeks to address a significant gap in the Indian investment landscape, where only about 54 million unique investors currently participate in mutual funds. With this initiative, Kotak Mahindra AMC aspires to tap into the vast potential of non-investors.

"Only about 54 million unique investors of India’s population are mutual fund investors, leaving a massive, untapped opportunity for penetration and bringing the Indian saver closer to financial freedom. Systematic Investment Plans (SIPs) have been an excellent way to bring new investors and kick-start their mutual fund journey. With the launch of Choti SIP, a new investor can begin their wealth creation journey with a minimum amount of Rs. 250. We can call it ‘Choti Rakam – Bada Kadam’,” said Nilesh Shah, Managing Director, KMAMC. 

The 'Choti SIP' scheme is exclusively available to first-time mutual fund investors, mandating a commitment to at least 60 monthly instalments, which can be facilitated via NACH or UPI auto-pay systems. The scheme is accessible only under the Growth Option, ensuring that investors focus on long-term capital appreciation. 

This approach is designed to foster a disciplined saving habit among new investors and to bridge the gap between potential and actual participation in the mutual fund sector. The initiative follows similar efforts by Aditya Birla Sun Life Mutual Fund, indicating a growing trend within the industry to lower entry barriers for retail investors. 

This initiative by Kotak Mahindra comes in the context of broader industry efforts to democratise investment opportunities across India. Other key players, such as SBI Mutual Fund, have also stepped into this space with their initiatives like JanNivesh SIP, similarly targeting small and first-time investors. The competitive landscape sees mutual fund companies vying for a share of the expanding market of new investors, with products tailored to ease the investment process and attract varied demographics across urban and rural landscapes. 

The funds accumulated through JanNivesh SIP will be allocated by SBI Mutual Fund into the SBI Balanced Advantage Fund, which was introduced on August 31, 2021. This fund, an open-ended dynamic asset allocation fund, strategically distributes investments between equity and debt instruments. Investors seeking long-term capital growth through a well-balanced blend of equity and debt may find this fund to be a suitable choice.