Average SIP ticket size shrinks 23% in over 3 years despite rising inflows

The average ticket size of systematic investment plans (SIPs) is on the wane, even as the total inflows through this route have been marching northwards.

According to data compiled by Motilal Oswal Financial Services, the average SIP investment per investor has declined gradually from Rs 2,860 in April 2019 to Rs 2,200 in October this year – 23.07 per cent in three and a half years.

The industry attributes the gradual decline in SIP ticket size to the growing penetration of mutual funds (MFs) on the back of rising ease of investment.

The past few years have seen the emergence of online platforms allowing MF investments in a few clicks and at zero cost. These have helped the industry add a large number of new investors.

In 2021-22, the industry added over 10 million new investors - the highest in a financial year.

The shrinking SIP ticket size is also a result of the ‘splitting of transactions’ by agents of institutional distributors, such as banks. They do so to complete their targets, says a senior MF distributor.

The act of splitting or dividing transactions is a practice whereby the distributor registers multiple SIPs of smaller amounts instead of one SIP of the total amount. This is practised by a section of individual MF distributors to earn a higher transaction fee.

In September, the Securities and Exchange Board of India asked the MF industry to identify and block such MF distributors.