Notwithstanding the volatile equity markets, the net flows into the mutual fund industry through Systematic Investment plan increased 77 per cent in the year ended March to ₹84,224 crore against ₹47,619 crore logged in the previous financial year.
In fact, the net inflows accounted for 54 per cent of highest ever gross SIP inflow of ₹1.56-lakh crore logged in FY23, according to data from the Association of Mutual Funds in India.
Interestingly, the net to gross ratio of SIPs has strengthened from 38 per cent in FY’22 to 54 per cent in FY’23.
This reflects the fact that industry has not only succeeded in adding new SIP accounts but also managed to retain some of the ongoing SIPs despite providing the option of pause in SIP.
NS Venkatesh, CEO, AMFI, said the industry provided the option of pause during the Covid pandemic for investors who were between jobs. However, he said if the pause on SIP continues for three months it is treated as discontinued by the industry.
In recent years, investors have matured and become more aware on the importance of long-term investment. The volatility in the capital market was perceived as an opportunity with increased retail participation in capital markets, said Fisdom, a leading wealth-tech platform.
While the withdrawal of B30 (beyond top 30) incentives may seem like a setback for distributors, it is not expected to have a significant impact on overall SIP contributions. Distributors focused on B30 cities have built a robust business model and are not solely reliant on incentives, it said.
The total number of SIP accounts opened last fiscal has increased 20 per cent to 6.36 crore against 5.28 crore recorded in the previous financial year.
The SIP asset under management of MF industry had risen 19 per cent to ₹6.83-lakh crore (₹5.76-lakh crore) despite the unprecedented ban on new fund offer in the first quarter of last fiscal.
Gopal Kavalireddi, Head of Research, FYERS, said there was a strong inflow of ₹1.46-lakh crore in equity funds and ₹1.57-lakh crore into index funds and ETFs in FY23. But this was partially negated by outflows of ₹1.84-lakh crore from debt mutual funds.
While debt mutual fund AUM decreased by 9 per cent, that of equity and passive funds registered an increase of 11 per cent and 34 per cent, respectively, with SIPs playing a major role, he said.