MFs see record SIP registrations in June at 2.13 mn on strong equity show

Market participants say under the pandemic SIPs have become a key component of investors' portfolios and even the trading class have started taking to them

Mutual funds (MFs) saw record new registration of systematic investment plans (SIPs) in June at 2.13 million. Since April, nearly 5.1 million new SIPs have been enrolled largely on the back of strong performance of equity markets.

Market participants say that in the current scenario SIPs have become an essential component of investors portfolio. “Earlier salaried classes used to invest in funds through SIPs. But during the pandemic even trading class have also understood the benefit of investing and have started doing SIPs,” said D P Singh, chief business officer at SBI MF.

In April and May, new SIP registered were 1.4 million and 1.54 million, respectively. In the last fiscal, around 14.13 million new SIPs were registered by the industry. Typically, MF investors come into equity funds looking at the past returns.

In the past one year, mid-cap funds have given average returns of 74 per cent, while large-cap funds have given returns of 47 per cent. Officials in the industry also say that not only the short-term returns but even long-term returns of equity funds have turned attractive, encouraging them to stay invested.

Typically, investors register SIPs for three-five years and continue with the investments if the returns are positive. In June, inflows into SIPs also increased to Rs 9,156 crore from Rs 8,819 crore in May.

While new registrations have risen in June, even SIPs discontinuations have also risen last month. Number of SIPs discontinued, or the tenure got completed stood at 762,000 up from 660,000 in May.