Inflows in the mutual fund industry through systematic investment plans or SIPs reached Rs 1.56 lakh crore in 2022-23, up 25 per cent from the preceding fiscal, suggesting retail investors’ trust in the route despite volatility in the markets.
In comparison, an inflow of Rs 1.24 lakh crore through the route was registered in 2021-22 and Rs 96,080 crore in 2020-2021, data with the Association of Mutual Funds in India (Amfi) showed.
Moreover, mutual fund SIP contribution has seen over three-fold rise during the last seven years. It was at Rs 43,921 crore during 2016-2017.
Additionally, SIP book has also grown consistently from Rs 12,328 crore in March 2022 to an all-time high of Rs 14,276 crore in March 2023, indicating a growth of 16 per cent.
During the financial year, SIP inflows averaged nearly Rs 13,000 crore flows per month, helping investors to stay in the stock market and benefit from rupee cost averaging. The steady inflow suggests resilience in domestic market which have been a strong counterbalance to FPIs (Foreign Portfolio Investors) selling.
Investors continue to believe in the long-term growth story and continue to add investments through SIPs and lump sum, Manish Mehta, National Head and Sales, Marketing and Digital Business, Kotak Mahindra Asset Management Company, said.
“SIP inflows for FY23 stood at Rs 1.56 lakh crore, a growth of 25.2 per cent on a year-on-year basis, with the highest-ever inflow in March at Rs 14,276 crore. With benchmark indices remaining volatile and flat for the year, investors choose mutual funds as the preferred route for investments, reposing faith in the Indian stock market,” Gopal Kavalireddi, Head of Research at FYERS, said.
The inflow came despite the volatility in the stock markets primarily on account of global geopolitical reasons and inflation.
Further, SIPs’ assets under management rose 18 per cent to Rs 6.83 lakh crore at the end of March this year from Rs 5.76 lakh crore in March-end 2022.
Industry experts believe that a staggered investment approach (via SIP or STP) in equity markets seems the ultimate solution to ride the wave of uncertainty as corrections would bring down the average cost of total investments or in case the bull run continues, investors would not lose out on opportunity cost.
SIP is an investment methodology offered by mutual funds wherein an individual saver can invest a fixed amount in a chosen scheme periodically at fixed intervals — say once a month, instead of making a lump sum investment. The SIP instalment amount can be as small as Rs 500 per month.
According to Amfi, SIPs have been gaining popularity among Indian savers, as it helps in rupee cost averaging and investing in a disciplined manner without worrying about market volatility or timing the market.
Currently, mutual funds have about 6.36 crore SIP accounts through which investors regularly invest in mutual fund schemes.
The 42-player mutual fund industry mainly depends on SIPs for inflows, with equity mutual funds attracting Rs 1.46 lakh crore in the financial year ended March 31, 2023.
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