SIP account addition slows even as equity fund flows hit record high in October

Incidentally, the data further showed that over 10 crore outstanding SIP accounts invested an average of Rs 2,499 each in October, the highest since May 2020, up from Rs 2,483 in September and Rs 2,449 in August. In May 2020, the average ticket size stood at Rs 2,535.

Net new SIP account addition continued to slow for the third consecutive month in October and the SIP stoppage ratio also remained above 60 percent for the second successive month to reach a five-month high in October, as per data from the Association of Mutual Funds in India (AMFI).

Interestingly, this happened even as October saw equity fund inflows hit a record high of Rs 41,887 crore with flows into open-ended equity funds staying in the positive zone for the 44th month in a row.

To be sure, AMFI data also shows that investments into mutual funds through the monthly systematic investment plans (SIPs) stood at Rs 25,322 crore in October, an all-time high -- it was Rs 24,509 crore in September.

Not surprisingly, experts believe that a slowdown in new SIP account additions or a high stoppage ratio is not a cause for concern.

They believe that some investors may be delaying new SIPs while awaiting market improvement while others could be choosing lump sum investments during market declines instead of starting new SIPs, thereby leading to a drop in new SIP registrations.

“While SIP registrations have slowed, the average SIP size has reached a multi-month high. Additionally, with over Rs 41,000 crore in net inflows, which have consistently risen across all mutual fund categories except dividend-yield funds, the trend remains positive,” said Feroze Azeez, Deputy CEO, Anand Rathi Wealth.

October saw 24.9 lakh net new SIP account opening, down from 26.1 lakh in September and 27.4 lakh in August and a notable drop from the July peak of 35.3 lakh. The SIP stoppage ratio reached around 61 percent in October, marking its highest level since May 2024 and slightly up from 60.72 percent in September.

Incidentally, the data further showed that over 10 crore outstanding SIP accounts invested an average of Rs 2,499 each in October, the highest since May 2020, up from Rs 2,483 in September and Rs 2,449 in August. In May 2020, the average ticket size stood at Rs 2,535.

“If the SIP slowdown was accompanied by reduced inflows into mid- or small-cap funds, I would be concerned. However, with rising ticket sizes and positive inflows, I am not worried,” said Azeez.

In October, open-ended equity mutual fund inflows rose 21.69 percent month-on-month to Rs 41,887 crore, reflecting strong demand across small-cap, mid-cap, and large-cap segments. Inflows into large-cap funds nearly doubled to Rs 3,452 crore, while mid-cap funds saw a 50 percent increase, reaching Rs 4,683 crore. Small-cap funds also experienced a 23 percent rise in inflows, totalling Rs 3,772 crore.

While inflows into sectoral/thematic funds declined by 7 percent, they remained robust at Rs 12,279 crore. Additionally, four new fund offers within the sectoral/thematic category contributed Rs 3,517 crore during the month.

Indian markets experienced significant volatility in October, with both the Sensex and Nifty dropping over six percent each, while broader indices such as the BSE MidCap and BSE SmallCap declined by over 4 percent and 7 percent, respectively.

The correction was largely driven by persistent selling from foreign institutional investors, who pulled out over Rs 94,000 crore amid weaker earnings in the September quarter and escalating geopolitical tensions. Additionally, sentiment was weighed down by China’s economic stimulus measures, high valuations of Indian markets, and expectations that the Reserve Bank of India will likely delay rate cuts.

The cumulative net selling of FIIs in October and November till date is pegged at nearly $14 billion.