Net SIP inflows remain static despite surge in gross influx

The net inflow into mutual funds through SIP remained static at 43 per cent or ₹8,248 crore last month despite the gross inflows touching a new high of ₹19,187 crore as the stoppage of existing SIP continue to increase.

• Also read: MF inflows through SIPs set to hit new high in FY24

In January, the net SIP inflow was 43 per cent of the gross inflow, totaling ₹8,192 crore out of ₹18,838 crore. This drop in investor confidence was due to increasing global uncertainty and the upcoming General Election, which affected the steady rise in market valuation.

Net to gross SIP inflows ratio has fallen from a high of 53 per cent in November to 37 per cent December but recovered to 43 per cent in last two months.

In the last 11 months, the net inflow at ₹79,681 crore accounted for only 44 per cent of the gross inflow of ₹1.80-lakh crore even as new SIPs opened hit a new high. This indicates that investors who began SIPs when the equity markets were at their highest have paused or stopped their SIPs due to negative experiences.

Though the Association of Mutual Funds in India announces gross SIP inflows every month, it shares the net inflows only privately with fund houses and distributors. Per AMFI, if an investor pauses his SIP instalment for three months at a stretch it is considered as discontinued.

Fast catching

Jinesh Shah, Research Analyst, SmartWealth Advisors, said the adoption of equity investment through mutual fund SIP is fast catching up in smaller cities even though the monthly instalments they make are less compared to urban regions.

However, he said investors who have entered the market in last two-three years have never seen a sharp downfall and tend to get panicky if their portfolio turns red without understanding that SIP investments are for long-term.

The number of SIPs that were stopped in the last 11 months was up by to 41 per cent to 2.01 crore against 1.43 crore in the whole of last fiscal.

New SIP accounts opened in the same period increased 53 per cent to 3.85 crore against 2.51 crore in the last fiscal ended March 2023.

• Also read:MF SIP stoppages cap net inflows to 43% of gross flows in Jan

Outstanding SIP accounts were up 29 per cent to 8.20 crore against 6.36 crore in the same period. The asset under management of SIP jumped 54 per cent as of February-end to ₹10.53-lakh crore against ₹6.83-lakh crore as of last March-end.

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