SIP closures rise 7.4% month-on-month in May

The number of systematic investment plan (SIP) accounts being discontinued rose 7.4 percent month-on-month to 14.19 lakh in May, despite the stellar inflow into mutual funds through the route. At the same time, the number of new SIP registration rose to 24.7 lakh last month from 19.56 lakh in April, implying fresh registration of over 5 lakh, data with the Association of Mutual Funds in India (AMFI) showed.

The higher number of SIP registration than discontinuation shows investors’ continued confidence in the route, DP Singh, Deputy MD and CBO at SBI Mutual Fund, said.

This could also be due to an easy cancellation facility available through online modes, he added.

Meanwhile, investors continued to park their money in mutual funds, with contributions in SIPs reaching a new high of Rs 14,749 crore last month, after a brief dip to Rs 13,728 crore in April. It was Rs 14,276 crore in March.

This robust inflow has led to assets under management of SIP rising by five per cent to Rs 7.53 lakh crore last month from Rs 7.17 lakh crore in April.

The surge in SIP inflows amid higher cancellations shows that new investors continue to invest more money than the average ticket size. Going by the data, the number of SIP accounts discontinued or matured rose from 13.21 lakh in April to 14.19 lakh in May.

Overall, 1.43 crore SIPs were discontinued or matured in 2022-23, which was higher than 1.11 crore SIPs in 2021-22. Although, the number of SIP registration was higher during these periods too.

Further, assets under management of equity mutual funds shot up 4.5 per cent month-on-month to Rs 16.56 lakh crore in May, fuelled by a surge in market indices and a spike in equity scheme sales.

The industry saw an increase in equity scheme sales month-on-month (MoM) by 21 per cent to Rs 34,100 crore.

At the same time, redemptions climbed nearly 37 per cent MoM to Rs 31,100 crore, consequently, net inflows dropped to a low of Rs 3,240 crore in May. This was also the second consecutive month of decline in inflows.

Going by the data, the asset base of equity mutual funds, including equity-linked saving schemes (ELSS) rose to Rs 16.56 lakh crore in May from Rs 15.84 lakh crore in April.

This was supported by a gain in NSE’s benchmark index Nifty by 2.6 per cent to 18,534 in May. So far this year, the Nifty climbed by 3.4 per cent.

In terms of sector, mutual funds showed an interest in NBFCs (non-banking finance companies), technology, automobiles, consumer, retail, and insurance leading to an MoM rise in their weights, according to a report by Motilal Oswal Financial Services.

Conversely, private banks, PSU banks, utilities, oil and gas, metals, and media saw an MoM moderation in weights, it added.