SIP's share in MF AUM hit new high of 17% in October, shows data

But overall AUM has increased a mere 6%

Mutual funds’ (MFs’) push for systematic investing seems to have struck a chord with investors. In the past few years, the assets in systematic investment plan (SIP) accounts are growing at a much faster pace than the MF industry’s overall assets under management (AUM), reveals data from the Association of Mutual Funds in India.

In the past year, SIP AUM has risen 22 per cent, from Rs 5.5 trillion to Rs 6.6 trillion. During the same period (November 2021 to October this year), the overall AUM of the MF industry rose only 6 per cent to Rs 39.5 trillion.

As a result, the share of SIP AUM in the total assets of the MF industry is rising consistently.

In October, SIPs accounted for 16.8 per cent of total AUM, significantly higher than what they were a year ago (14.8 per cent).

The rising share of SIPs in the industry’s AUM is a result of higher participation from retail investors.

The MF industry added a record number of new investors in 2021-22 and is continuing to add about 400,000 new investors on average in 2022-23.

MF executives and distributors attribute the rising interest of retail investors to heightened financial awareness, lack of other high-yielding investment opportunities, and superior performance of MF schemes in the post-pandemic period.

SIP inflows mostly go into equity funds and hence, have a higher growth rate. Given that a majority of equity funds have not done any better than debt funds in the stated period, the faster growth in SIP AUM may be attributed to the surging monthly SIP inflows.

SIP inflows have grown concurrently with investor count.

In October, SIP inflows rose for the fourth straight month to touch the Rs 13,000-crore mark for the first time. The inflows have been rising consistently in a post-Covid era, irrespective of the market condition. The figure used to be around Rs 8,000 crore before the pandemic reared its ugly head.

October also marked a reversal in net SIP inflows, which are gross SIP inflows minus redemptions from SIP accounts.

Last month, the net SIP inflows surged for the first time in four months, signifying a decline in redemptions from SIP accounts.

The net SIP inflows stood at Rs 7,500 crore in October, up 17 per cent from Rs 6,400 crore in September.