Mutual Fund SIP Accounts At 6.97 Crore, Inflows At Record High; What Should Investors Do?

Systematic Investment Plan or SIP witnessed record high inflows of Rs 15,814 crore in August 2023. This would be the second consecutive month where SIP inflows have stayed above Rs 15,000 mark. This investment option in mutual fund SIPs registered 35.92 lakh new investors in August. Gopal Kavalireddi, Vice President - Research at FYERS said, investors continue to retain their disciplined strategy of opting for Systematic investment plans with markets moving into a higher valuation territory.

As per the data from AMFI, in August 2023, SIPs inflows were at Rs 15,814 crore compared to Rs 15,245 crore in July and Rs 14,734 crore in June month. A total of 35.92 lakh new investors opted for SIPs in August, taking the total customer base in SIPs plan to 696.86 lakh so far in FY24.

SIPs saw 33.06 lakh new customers in July month.

From April to August 2023 of the fiscal FY24, SIPs witnessed 141.02 lakh new customers, while total inflows stood at Rs 74,270 crore.

In FY22, SIPs inflow was at Rs 1,55,972 crore with a customer base of 527.73 lakh.

SIPs is an investment plan (methodology) 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 installment amount could be as small as ₹ 500 per month. SIP is similar to a recurring deposit where you deposit a small /fixed amount every month.

SIP 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, as per AMFI.

Talking about the latest performance, Kavalireddi said, "SIP inflows for August were at Rs.15,813 crore, well above the Rs.15,000 crore level for the second month. Investors continue to retain their disciplined strategy of opting for Systematic investment plans with markets moving into a higher valuation territory. The market cap to GDP ratio for India has risen above the 106 per cent mark, venturing into the overvalued territory for the time being."

He added, "Prudent investors can look to take their foot off the pedal from infusing fresh lumpsum funds into the market and continue the SIP mode to counter any market correction or volatility in the near term."

In August, overall net inflows into mutual fund schemes stood at Rs 14,385.93 crore which was down from inflows of Rs 82,046.08 crore in July 2023.

Kavalireddi highlighted that while the debt category saw net outflows of Rs.25,872 crore, equity mutual funds remained strong at Rs.20,245 crore of net inflows, with Hybrid fund flows of Rs.17,082 crore, maintaining their momentum from last month. A total of Rs.7531 crore was raised through 14 new fund offerings(NFOs) in the month of August.

From the debt category, liquid and overnight funds accounted for Rs
30,947 crore of net outflows, while overnight funds (Rs.3158 crore), Floater funds (Rs.2325 crore) and Corporate bond funds (Rs.1755 crore) saw good inflows, he said.

In case of Equity mutual funds, he added, flows were higher for the fifth consecutive month, registering a 165% rise. Of the Rs.20,245 crore of inflows, thematic funds stood at the top spot with Rs.4806 crore, a 236 per cent rise over August inflows. Five NFOs from the sectoral fund category collectively garnered Rs.2556 crore. A total of Rs.5002 crore was raised through 7 NFOs in the equity categories, while Rs.2247 crore was raised through one Hybrid category scheme.

"Investors continued to hold their interest in Small cap funds with Rs.4265 crore of inflows, maintaining the run rate above the Rs.4000 crore mark for the third month in a row. Multicap funds with inflows at Rs.3422 crore, Midcap funds at Rs.2512 crore and Flexi cap funds at Rs.2193 crore were the other three categories gaining substantial flows from investors," Kavalireddi highlighted.

Furthermore, as per Kavalireddi, over the last six months, the large-cap indices underperformed in comparison to the mid and small-cap indices by a substantial margin. In August, the benchmark Nifty 50 index was down by 2.53 per cent, while the Nifty Midcap 100 index was up 3.7 per cent, following up on the 5.5 per cent in July, 5.9 per cent in June, and 6.2 per cent in May. Similarly, the Nifty Smallcap 100 index rose by 4.6 per cent in August, following up on the strong 8 per cent return in July, 6.6 per cent in June and 5.1 per cent in May.

He also pointed out smart investors, noticing the underperformance of the broader markets at the beginning of the calendar year, infused Rs.28,244 crore in the mid and small-cap funds between April - August period. In the same period, large-cap funds witnessed an outflow of Rs.5588 crore.

By the end of August month, total Assets under Management (AUM) stood at Rs 46.63 lakh crore versus Rs 46.37 lakh crore with equity AUM contribution at Rs 18.4 lakh crore versus Rs.17.8 lakh crore (MoM).

Disclaimer

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