Outflow rise from SIP accounts in H1CY24 slows growth in net inflows

Recoveries from SIP accounts in June stood at over Rs 10,000 crore for seventh straight month

At a time when gross systematic inflows into equity schemes are rising, redemptions are also on an upward trajectory — a sign that incumbent investors are taking money off the table even as the relentless rally brings in new investors. In June, redemptions from systematic investment plan (SIP) accounts stood at over Rs 10,000 crore for the seventh straight month.

At Rs 12,681 crore, the redemptions last month were a record high. As a result, net SIP inflows as a percentage of gross SIP collection declined to an 11-month low of 40 per cent. MFs raked in a net of Rs 8,581 crore last month vis-a-vis Rs 21,262 crore gross SIP inflows, shows data from the Association of Mutual Funds in India (Amfi).

"Investors could be booking profits as the market has been scaling new highs," said Anand Vardarajan, chief business officer at Tata Asset Management.

Swarup Anand Mohanty, vice chairman & CEO, Mirae Asset Investment Managers (India), said the trend showed that even SIP investors are looking to time the market and that it's not a good sign.

"It is sad to see investors timing the market even through the SIP route. It was evident when the flows started getting skewed towards small caps in the last two years. It just shows that there is still a lot of financial education needed for investors on basics like rupee cost averaging in SIPs. In an economy that is set to double in the coming years, stopping SIPs will take investors out of this growth path," Mohanty said.

The aggregate gross inflows in the first six months of 2024 came in at Rs 1.2 trillion, 41 per cent higher than the inflows in the same period last year. However, the net SIP inflows registered only a 25 per cent growth at Rs 52,016 crore in the same period.

Even as net SIP inflows have been subdued, the aggregate net flows into equity mutual fund schemes have been registering new highs in the past two months, thanks to robust collections by new fund offerings (NFOs) and lump sum inflows.

In June, new offerings in the active equity space collected Rs 14,370 crore, the highest in a calendar month.

In the first half of 2024, mutual funds launched 30 active equity schemes, compared to 51 in the entire 2023. Also, NFO collections by active equity schemes in 2024 have outpaced the 2023 total, with equity NFOs raking in Rs 37,885 crore by June, surpassing the Rs 36,657 crore collected during the previous year. In 2022, 27 launches had collected Rs 29,586 crore.

The new launches also resulted in a record number of new folio additions last month. Active equity schemes added a net of four million accounts in June, with thematic funds alone adding nearly two million folios.