10 mn in 2016 to 5 mn accounts in just a month; MF industry grows in 8 yrs

WEALTH GROWS SIP BY SIP: AUM and active accounts skyrocket 8x; monthly inflows achieve a 6x soar since 2016

The total number of active systematic investment plan (SIP) accounts stood at close to 10 million at the start of 2016. Eight years on, the mutual fund (MF) industry is adding 5 million accounts in just a month.

Moreover, the monthly contributions have grown over sixfold to Rs 18,800 crore, according to data from the Association of Mutual Funds in India (Amfi).

The assets under management linked to SIP accounts have surged 8.6x from Rs 1.2 trillion to Rs 10.3 trillion during this period.

The phenomenal growth underscores the shift in investor behaviour, with many committing to make staggered investments — mostly on a monthly or quarterly basis — to ride out the volatility associated with investing, particularly in equities.

The SIP route is used by retail investors, and over 90 per cent of the flows go into actively managed equity schemes.

“The surge in SIP accounts to an unprecedented 79.2 million in January 2024, coupled with the milestone of over 5.1 million new registrations, underscores the unwavering commitment of investors towards disciplined wealth creation,” said Venkat Nageswar Chalasani, chief executive officer (CEO), Amfi.

“While new investors are using SIPs as a disciplined approach to building their corpus, we also saw existing investors renewing their SIPs and starting fresh ones based on their positive past experiences. The growth in the net SIP addition reflects renewed investor confidence driven by robust fund performance and sustained efforts in financial literacy by fund houses,” said Vishal Kapoor, CEO, Bandhan Asset Management Company.

The ease of investment and discontinuation of SIP accounts after the launch of direct online investment platforms have also been major contributors to the sharp surge in registrations as well as discontinuations, say MF executives.

In January, while investors registered 5.1 million new accounts, they also discontinued 2.2 million existing ones. Hence, the net additions in SIP accounts stood at 2.8 million.

As a result of similar growth in discontinuations in SIP accounts, the gross-to-net ratio of SIP account additions has remained elevated.

In calendar year 2023, the net additions were only 58 per cent of the total 34 million registrations.

The situation is similar in the case of SIP inflows. During the July–December period, MF investors’ net SIP investments stood at just 45 per cent of gross inflows.