Monthly SIPs drive 5-year equity fund inflow streak as lumpsums dip

By Ashutosh Joshi

 

India’s nearly five-year record streak of equity fund inflows is relying on monthly recurring plans more than ever before, as recent market volatility has reduced lumpsum investments in mutual funds. 

 

Actively managed equity funds took in a net Rs 24,270 crore ($2.8 billion) in April, but this inflow was eclipsed by Rs 26,630 crore pouring into monthly systematic investment plans for a second straight month, data from the Association of Mutual Funds in India show. 

 

Equity funds have emerged as a key pillar of support to domestic markets in recent years. Flows from plans where savers set aside a fixed amount every month as part of their mutual fund investment plan — akin to dollar-cost averaging in the US — have hovered above $3 billion per month, helping buffer the nation’s equities against the recent outflows by foreign investors. 

 

“With market uncertainty, lump sum participation has come down as investors are probably taking a waiting approach to fresh investments,” said Manish Mehta, head of sales, marketing & digital Business at Kotak Mahindra AMC. 

 

The NSE Nifty 50 Index jumped 3 per cent on Monday after India and Pakistan announced a surprise ceasefire on Saturday. Still, the threat of renewed tensions remains, as India has yet to lift its abeyance on the Indus Water Treaty.