SIP collection up Rs 1.66 trn in 2023, lower ticket size to push inflow

Investors are placing significant bets on systematic investment plans, or SIPs, with inflows rising to Rs 1.66 lakh crore in the first 11 months of 2023, while Sebi's decision to lower the ticket size to Rs 250 will further boost investment.

The total invested in the first 11 months this year is way higher than Rs 1.5 lakh crore through the route in the entire 2022, Rs 1.14 lakh crore in 2021, Rs 97,000 crore in 2020, as per data with the Association of Mutual Funds in India (AMFI).

Going ahead, Akhil Chaturvedi, Chief Business Officer of Motilal Oswal AMC, anticipated a sustained and healthy year-on-year growth in overall SIP participation.

"With a buoyant economic outlook and increased market participation, investors are likely to continue favouring SIPs as a disciplined and accessible investment avenue. The ongoing strength in the market, coupled with the potential for healthy returns, reinforces our belief that the upward trend in SIPs will persist throughout 2024," he added.

According to the data, inflow in mutual fund schemes through SIPs was at Rs 1.66 lakh crore in this year (till November).

Industry experts have attributed several factors that influenced the surge in inflow such as awareness created by Association of Mutual Funds in India (AMFI), demographics, strong return on equity investment and ease of investment.

"AMFI has played a pivotal role in raising awareness about the benefits of SIP and equity investing. Besides, demographics play a pivotal role in this surge. Also, structural change in how people in India perceive and approach equity as an asset class also helped," Chaturvedi said.

SIP is an investment methodology offered by mutual funds wherein an individual can invest a fixed amount in a chosen scheme periodically at fixed intervals -- say once a month, instead of making a lumpsum investment.

At present, SIP instalment amount can be as small as Rs 500 per month.

Further, Sebi wishes to sachetise mutual fund investments going forward, a move that will help in the financial inclusion agenda, and also help the Indian capital market.

Earlier this month, Sebi Chairperson Madhabi Puri Buch said the regulator is working with mutual funds to make SIPs of Rs 250 viable for the general public, leading to increased investments.

Aditya Birla Sun Life AMC Managing Director and CEO A Balasubramanian told PTI that he believes smaller ticket-sized SIPs will open the investment doors for the lower income group of the population.

"The push towards smaller ticket size SIPs will help improve participation amongst smaller investors which will emanate into further expediting expansion of the retail base in the country," Zerodha Fund House CEO Vishal Jain said.

Interestingly, Aditya Birla Sun Life Mutual Fund already offers lower ticket SIPs starting at Rs 100.

The SIP book has grown consistently from Rs 11,305 crore in December last year to an all-time high of Rs 17,073 crore in November this year. Before that, monthly contributions from SIP touched over Rs 16,000 crore in September and October.

The growing SIP numbers indicate a growing trust in the equity markets.

Further, SIPs' Assets Under Management (AUM) jumped 38 per cent to Rs 9.31 lakh crore at the end of November 2023 from Rs 6.75 lakh crore at the end of December 2022.

Currently, mutual funds have about 7.44 crore SIP accounts.

The 42-player mutual fund industry mainly depends on SIPs for inflows, with equity mutual funds attracting Rs 1.44 lakh crore in this year (till November).

The consistent monthly increase in SIP flows have helped the industry to grow its AUM to Rs 49 lakh crore in November-end from Rs 40 lakh crore in the end of December 2022.