SIP share in smallcap AUM surged past 50% till March 2024, shows data

Despite market volatility, smallcap and midcap equity mutual funds have emerged the top choices for retail investors, drawing the highest inflows through systematic investment plans (SIPs).

 

According to a recent industry report, SIPs account for over half of the total assets under management (AUMs) of smallcap funds, with midcaps following closely.

 

As of March 2024, SIPs accounted for 53 per cent of smallcap AUMs, up from 43 per cent in March 2019.

 

Midcaps saw SIPs contribute 46 per cent to their AUM, while largecap and flexicap funds had SIP shares of 43 per cent and 38 per cent, respectively.

 

The data highlights the growing appeal of midcap and smallcap schemes among retail investors.

 

During the past three calendar years, these funds have accounted for over 30 per cent of net folio additions in active equity schemes.

 

MF officials and investment experts recommend SIPs as the preferred route for smallcap and midcap fund investments due to their volatility.

 

“SIP helps investors average out their purchase cost, reducing the risk of entering at the wrong time,” said Feroze Azeez, deputy chief executive officer (deputy CEO), Anand Rathi Wealth. 

 

The strong performance of these schemes across time frames has also contributed to robust SIP inflows.

 

“Smallcap and midcap funds have delivered average SIP returns of 16-20 per cent across different time frames, significantly higher than largecaps,” said Azeez.

 

In recent times, the share of SIP assets in smallcap funds has increased further, with many larger schemes no longer accepting lump sum inflows.

 

The Securities and Exchange Board of India (Sebi) had expressed concerns over smallcap valuations in March 2024, prompting fund houses to take steps to safeguard investors.

 

Despite these concerns, smallcap and midcap funds remain among the top choices for retail investors.