Mutual funds SIP investments increase 28% to Rs 2 trillion in FY24

Buoyant economic outlook and increased market participation helped drive the inflows in the mutual fund industry through systematic investment plans or SIPs route to record Rs 2 lakh crore in 2023-24, marking a rise of 28 per cent year-on-year.

In comparison, an inflow of 1.56 lakh crore was witnessed through this route in 2022-23, Rs 1.24 lakh in 2021-22 and Rs 96,080 crore in 2020-2021, data with the Association of Mutual Funds in India (Amfi) showed.

Moreover, mutual fund SIP contribution has seen over four-fold rise during the last seven years. It was Rs 43,921 crore in 2016-17.

Additionally, SIP book has also grown consistently from Rs 14,276 crore in March 2023 to an all-time high of Rs 19,270 crore in March 2024, indicating a growth of 35 per cent.

The SIP contributions consistently exceeding Rs 19,000 crore for two straight months in February and March this year signal a shift towards a more disciplined investment strategy among investors.

"This disciplined approach is further exemplified by the increased preference for equities, driven by their strong performance over the past year, indicative of investors conducting regular portfolio assessments and adjustments," Karthick Jonagadla, smallcase Manager and founder, Quantace Research, said.

Mirae Asset Investment Managers Vice Chairman and CEO Swarup Anand Mohanty said the consistent surge in SIP flows signals a promising trajectory and anticipates this momentum propelling to achieve a milestone of Rs 25,000 crore by the end of 2024.

Industry experts believe that a buoyant economic outlook, along with increased market participation from retail investors, helped in raising the SIP inflow.

The investors' confidence in mutual funds continues, which is reflected by the SIP accounts hitting a record high of 8.4 crore in March 2024.
 

The SIP AUM stood at Rs 10.71 lakh crore, surpassing February's figures of Rs 10.52 lakh crore. This underscores investors' unwavering commitment to disciplined wealth accumulation, AMFI Chief Executive Venkat Chalasani said.

Notably, SIP is an investment tool offered by mutual funds, which allows an individual to invest a certain amount in a chosen scheme periodically at fixed intervals, like once a month, instead of going for a lumpsum investment. SIP instalments can be as small as Rs 500 per month.

In December, Sebi chairperson Madhabi Puri Buch said the markets regulator is also working with mutual funds to make SIPs of Rs 250 possible for the general public, which will boost investments.

The mutual fund industry majorly depends on SIPs for inflows, whereas equity mutual funds saw an inflow of Rs 1.84 lakh crore in FY24.

The regular monthly increase in SIP flows facilitated the industry to grow its AUM by Rs 14 lakh crore or a gain of 35 per cent to Rs 53.4 lakh crore in FY24 from Rs 39.42 lakh crore in FY23.