New SIP registrations down 16% sequentially in April on Covid impact

The second wave of Covid-19 has impacted the sales of new systematic investment plans (SIPs). In April around 1.40 million new SIPs were registered by the Mutual Fund (MF) industry, down by almost 16 per cent compared to March 2021.

Industry participants say that distributors have been facing difficulty to reach out to newer clients particularly in the rural areas due to the Covid-19 pandemic. At the same time, tech savvy urban investors continue to do online purchases. In March, 1.67 million new SIPs were registered which was the highest for the financial year 2020-21.

“The new account opening of systematic investment plans (SIPs) have fallen in the last few months as everyone is impacted due to the second wave of the novel Coronavirus. Banks are not yet full-fledged open, and distributors have also been facing difficulty to get new clients due to the partial lock-downs in several states,” says D.P Singh, Chief Business Officer at SBI MF.

Total contribution through the SIP route also came down to Rs 8,596 crore in April, against Rs 9,182 crore in March. While equity funds continued to see net inflows for the second consecutive month in April, the quantum fell sharply compared to March.

Equity-oriented schemes saw net inflows of Rs 3,437 crore in April against Rs 9,115 crore in March, when flows had turned positive after a gap of eight months, shows the data from the Association of Mutual Funds in India (AMFI). The fall in net inflows was largely due to the distraction caused by the second wave of Coronavirus.

Industry participants are hopeful that as the normalcy restores in the next few months, investors will once again come back to the mutual funds. “I assume even in May we might see lower new registrations of SIP, but from June when things stabilize, we might again see renewed interest in new SIPs opening,” added Singh.