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SIPs back in favour, equity mutual funds see inflow after 8 months; here's why

The number of SIP accounts outstanding increased to 3.72 crore in March compared to 3.62 crore in the previous month.

April 23, 2021 / 11:28 AM IST

After eight consecutive months of outflow, equity mutual funds saw net inflows of Rs 9,115 crore in March 2021, data released by the Association of Mutual Funds in India (AMFI) shows.

Besides, investors continued showing their faith in systematic investment plans (SIP), a tool to invest in equity funds, as the contribution through SIPs went up to Rs 9,182 crore in March compared to Rs 7,528 crore in the previous month.

The number of SIP accounts outstanding increased to 3.72 crore in March compared to 3.62 crore in February.

Read more: Investors come back to equity mutual funds after eight months

Why SIPs are in demand again?

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It appears that the market volatility pushed investors towards equity mutual funds, especially through SIPs.

The Indian market has seen strong bouts of volatility in April. Volatile market and correction in stocks seem to have made equity funds and SIP attractive to investors.

The Sensex is down 3 percent, while the Nifty has retreated 2 percent in the month so far.

"The increased volatility in the market has left clients with mixed feelings. Hence, rather than investing in lump-sum, the clients are preferring SIPs and STP," said Jharna Agarwal, Head, Anand Rathi Preferred.

"Portfolios, where investment bookings happened in last six months, are now returning back via SIP & STP (systematic transfer plan). For salaried section of clients, increased job security and annual hikes have led to fresh SIP bookings," Agarwal said.

Harsha Upadhyaya, President & CIO–Equity, Kotak Mahindra Asset Management Company, said out after almost three quarters, there were signs of a trend reversal in terms of domestic flows.

"Market valuations correcting a bit in recent times may have changed investor sentiment towards equity investments," Upadhyaya said.

"Even SIPs registered renewed interest with monthly figures going past Rs 9,000 crore—the highest ever monthly SIP flow, in March 2021. If this trend continues going forward, we can expect domestic flows to support the market at lower levels," he said.

According to Kaushlendra Singh Sengar, Founder and CEO at INVEST19 Technologies, last year, the equity market had a roller-coaster ride during the COVID-19 pandemic. Individual investors benefited from buying stocks at undervalued prices and made profits from direct equities.

"The country witnessed the highest ever SIPs net inflows in March 2021. Also, it was the first time in the last eight months when the equity funds start seeing inflows instead of outflows. It indicates that people are again looking to invest in equities," Sengar said.

"However, given the situation is getting bad again, they are looking for some normalisation in their money allocations. SIP is the safest way for individual investors to ride out the volatility and build long-term wealth," he said.

If you are investing in equity funds, then continue your SIPs. “Even if you are sitting on a lump-sum, it is better to invest in a staggered manner in diversified equity schemes,” advises DP Singh, Chief Business Officer, SBI Mutual Fund.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Nishant Kumar
first published: Apr 23, 2021 11:28 am

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