SIP flow continues to break record

Illustration: Binay Sinha
Inflow into mutual funds (MFs) through Systematic Investment Plans (SIPs) touched a new record high in July. The Rs 20-lakh crore fund industry registered SIP inflow of nearly Rs 5,000 crore, about 50 per cent more than in July 2016.


Under the SIP route, an investor commits to invest a fixed sum every month. SIPs have become a popular investment route among investors, increasingly looking at channelising their monthly savings in high-yielding assets like equities. July was the third straight month when SIP inflow touched a new record, with average monthly flow during this period at Rs 4,760 crore.


Source: Amfi
Those in the sector say the bulk of SIPs into equity-oriented schemes have an average size of only Rs 3,500. Since April, about 1.7 million SIP accounts have been added. Data suggests new MF investors are opting for the SIP route, as opposed to one-time or lumpsum investment.


Companies say many investors have developed a strong connect with SIPs and treat it as an asset class like gold, fixed-income or equity. As stock market valuations remain elevated, money managers are advising staggered payments, to spread the risk.


Average monthly flow through SIPs has grown steadily over three years, from Rs 1,000 crore a month to Rs 5,000 crore at present. Those in the segment expect the monthly average to rise even further.


Given their sticky nature, SIP flows have provided stability to asset managers. “SIPs are ensuring the industry is getting an assured sum of more than Rs 4,000 crore every month, a very healthy sign,” says the chief executive of a fund house. In the past 12 months, SIP inflow has been Rs 53,000 crore or a monthly average of Rs 4,100 crore.

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