State Bank of India‘s (SBI) mutual fund unit on Wednesday lowered the minimum monthly investment limit in select funds to Rs100, joining the likes of UTI Mutual Fund and ICICI Prudential Asset Management.
The funds are Magnum Balance, MMPS-93, MSFU Contra fund and SBI Blue Chip fund.
SBI Mutual Fund hopes to attract about 250,000 investors in the first year with this initiative, SBI chairman O.P. Bhatt said.
Typically, the minimum investment into Indian mutual funds is Rs500, but an increasing number of money managers are lowering the investment threshold, in a bid to attract small investors from tier II and tier III cities.
An invester N.Balaji comments on this move made by SBI as follows :
By lowering the investment amount, one may be attracting new investors, but is that really the right thing to do? People should come into Mutual Funds because they understand and are willing to accept the risk attached to these insrtuments. Not because it is cheap to enter. The people buying funds at Rs. 100 are inevitably going to be the lower income group who may lose their principle if not advised correctly. I see agents using this Rs. 100 as a major misselling point.
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