Smart money's new playground: SIPs close to hitting 100 million sweet spot

The number of active systematic investment plan (SIP) accounts in mutual funds (MFs) is nearing the 100 million milestone, driven by a bull run in the equity market and a rush of new fund offerings (NFOs) that boosted account additions in calendar year (CY) 2024.

In the first eight months of the year, MFs added 19.7 million accounts, compared to 15.1 million for the entirety of CY 2023.

The increasing number of SIP accounts has also contributed to consistent growth in monthly SIP collections. The SIP contribution, which was Rs 17,610 crore in December 2023, rose to Rs 23,547 crore in August.

SIPs have emerged as a key source of inflows for the MF industry. Inflows into equity funds have remained positive for 42 consecutive months since March 2021, following increased traction for SIPs after the pandemic.

Roughly 90 per cent of SIP inflows are directed into equity funds. These schemes have collected around Rs 1.7 trillion so far in 2024-25, representing 92 per cent of the total collections of Rs 1.8 trillion in 2023-24.

Based on folio addition data, most of the new SIP accounts are likely in sectoral, smallcap, and midcap funds.

Folios include both SIP and lump-sum investment accounts. Schemes in these categories have collectively added 19.5 million folios, accounting for 65 per cent of the total additions in the active equity category. Sectoral and thematic schemes alone have contributed 11 million folios.