Inflows into the domestic mutual fund (MF) industry through the systematic investment plan (SIP) route crossed Rs 10,000 crore for the first time in September. According to data released by the industry body Association of Mutual Funds (AMFI), investors opened over 26.80 lakh new SIP accounts during the month. This is nearly 2.5 times higher than the long-term average.
It is the fourth consecutive month of new SIP registrations topping 20 lakh. This now takes the total SIP accounts to 4.5 crore while a year ago, SIP accounts stood at 3.34 crore.
The assets under management (AUM) of SIPs increased to Rs 5.44 lakh crore (almost a third of the total retail AUMs of Rs 17.72 lakh crore) from Rs 5.26 lakh crore at the end of August 2021. The industry asset under management (AUM) at the end of September reached Rs 36.74 lakh crore.
SIP is an investing method wherein the investor commits a fixed sum every month as opposed to investing a large sum at one go. Sustained inflows through SIPs have provided the domestic MF industry a solid foundation for growth.
Experts attribute this rise in SIP to retail investors preferring mutual funds over low-yielding traditional savings avenues like bank FDs, and also gold and real estate.
Category-wise, equity and equity-oriented mutual funds saw a net inflow of Rs 8,677 crore, index funds saw a net inflow of Rs 11,600 crore and hybrid schemes saw a net inflow of Rs 3,600 crore. However, debt funds witnessed a massive net outflow of Rs 64,000 crore during the month. This resulted in an overall net outflow of Rs 47,250 crore in September.
Market participants say that with continuous surge in the markets in the last few months, investors have preferred SIPs over lump sum investments.
According to a news report in “The Economic Times”, the registration of new SIPs continues to grow at a robust pace, and this is helping local funds expand their dominance, which in turn is powering the stock market rally.
The report added that the cumulative net SIP registrations in the first half of FY22 stood at 7.66 million. New SIP additions have helped the monthly SIP book expand to a record high of Rs10,351 crore in September 2021.
The SIP book has grown at 22.8% on an annualised basis over the last five years, which has catapulted assets under management of the funds linked to the SIP accounts to Rs5.44 lakh crore in September 2021.
This is equivalent to 14.83% of the total industry AUM. Average ticket size for investment in the SIP accounts stood at Rs2,305. This has been shrinking in the last few months as a large part of new SIP registrations were generated by the digital platforms where ticket size drops below Rs500 for bulk of new investors.
The long-term average of ticket size of SIP accounts has been Rs2,923. The rolling cumulative inflow from the SIP accounts in the six months till end of September 2021 has been Rs56,452 crore, the highest since data has been available with the AMFI.
According to the industry estimate, nearly 90% of SIP accounts are linked to equity-linked funds. This implies that around Rs50,806 crore has entered the equity market through SIP inflows, while in the same duration, FPI inflow in the Indian equities stood at Rs8,259 crore only.