SIPs see highest inflows despite market fall in March

Equity funds registered highest-ever inflows of Rs 11,723 crore in FY20.

April 12, 2020 / 03:45 PM IST

Systematic investment plans (SIP) of mutual funds registered record-high inflows in March at Rs 8,641.20 crore, despite a 23 percent fall in the benchmark indices. In February, inflows stood at Rs 8,512.93 crore.

The number of SIP folios increased by two lakh to 3.11 crore against 3.09 crore registered in February.

“Unprecedented situations warrant an equally unprecedented response, to help make the most of the crisis opportunity. This precisely sums up the retail investor riposte. Instead of exiting their investment in equity funds, retail investors have not only held on but added more folios, through SIPs recording highest ever equity inflows," said NS Venkatesh, CEO of AMFI.

In FY20, the total SIP mobilisation stood at Rs 100,084 crore from Rs 92,693 crore a year ago.

AMFI data also shows that the MF industry added, on an average, 9.55 lakh SIP accounts each month during the current financial year (FY20), with an average SIP size of about Rs 2,800 per SIP account.

Fund managers attributed the all-time high AUM numbers to savvy investors who are sticking to their long term SIPs.

Equity funds registered highest-ever inflows of Rs 11,723 crore in FY20. In February, equity funds had recorded inflows of Rs 10,795 crore.

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“Equity inflow figures show resilience while we are witnessing buying at lower levels these are signs of growing maturity and understanding on the part of investors towards equity as a long-term asset class,” said Tarun Birani, Founder & CEO, TBNG Capital Advisor.

“I feel strong equity inflow figures are a positive indication that investors continue to put faith in the long term in equities despite negative markets. Additionally, we are observing a surge in the parking of idle cash by investors while they wait to pump it in for benefits when markets fall,” he added.

Overall, the assets under management (AUM) of a 42-player mutual fund industry dipped 18 percent in March to Rs 22.26-lakh crore against Rs 27.22-lakh crore reported in February.

What are SIPs?

SIP is an investment method offered by mutual funds wherein one could invest a fixed amount in a mutual fund scheme periodically at fixed intervals - say once a month instead of making a lump-sum investment.

The SIP instalment amount could be as small as Rs 500 per month. SIP is similar to a recurring deposit where you deposit a small/fixed amount every month.

It is a very convenient method of investing in mutual funds through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time.

SIP has been gaining popularity among Indian MF investors, as it helps in Rupee Cost Averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.

SIPs help the investor average his cost over a period of time, fetching more units when prices are low and fewer units when prices are high

Generally, buying at low prices and selling at high prices in SIP works brilliantly because the volatility means you buy more units at a lesser price and hence your ultimate returns will be very good.
Himadri Buch
first published: Apr 9, 2020 07:15 pm

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