The monthly contribution into Systematic Investment Plans (SIPs) touched an all-time high of Rs 12,976 crore in September as compared to Rs 12,693 crore in August, according to the data released by Association of Mutual Funds in India (AMFI). The SIP accounts went up to 5.83 crore as on September 30, 2022 compared to 5.71 crore as on August 30, 2022.
SIP assets under management (AUM) stood at Rs 6.35 lakh crore with a month-on-month inflow of Rs 4,501 crore taking the total SIP AUM to Rs 6.39 lakh crore for September.
So, what is the reason for the rise?
The increase in the amount of SIP collected shows that retail investors are taking a disciplined approach to their mutual fund investment.
“During the past few months, the market reacted to inflationary factors and rate hikes. However, small investors have shown consistent faith in mutual fund investments and they see SIP as wealth accumulation and wealth creation over a longer-term,” said AMFI’s Chief Executive N S Venkatesh.
He added that he is hopeful that SIPs will touch Rs 13,000 crore per month mark in contribution in the coming months.
According to Kavitha Krishnan of Morningstar India, despite the financial turmoil in the domestic and global markets following rate hikes by central banks along with the rupee fall, domestic investors continued to invest in the markets, leading to positive flows during the month.
"This is likely indicative of investors' preference for investing during market dips. The overall positive sentiment is also likely driven by investors' interest towards investing in the NFOs that were launched in the month,” she said.
Month-wise amount collected from FY 2016-17 onwards are mentioned below:
| Month | | SIP Contribution ₹ crore |
|---|
| | FY 2022-23 | FY 2021-22 | FY 2020-21 | FY 2019-20 | FY 2018-19 | FY 2017-18 | FY 2016-17 |
| Total during FY | 74,234 | 1,24,566 | 96,080 | 1,00,084 | 92,693 | 67,190 | 43,921 |
| March | | 12,328 | 9,182 | 8,641 | 8,055 | 7,119 | 4,335 |
| February | | 11,438 | 7,528 | 8,513 | 8,095 | 6,425 | 4,050 |
| January | | 11,517 | 8,023 | 8,532 | 8,064 | 6,644 | 4,095 |
| December | | 11,305 | 8,418 | 8,518 | 8,022 | 6,222 | 3,973 |
| November | | 11,005 | 7,302 | 8,273 | 7,985 | 5,893 | 3,884 |
| October | | 10,519 | 7,800 | 8,246 | 7,985 | 5,621 | 3,434 |
| September | 12,976 | 10,351 | 7,788 | 8,263 | 7,727 | 5,516 | 3,698 |
| August | 12,693 | 9,923 | 7,792 | 8,231 | 7,658 | 5,206 | 3,497 |
| July | 12,140 | 9,609 | 7,831 | 8,324 | 7,554 | 4,947 | 3,334 |
| Jun | 12,276 | 9,156 | 7,917 | 8,122 | 7,554 | 4,744 | 3,310 |
| May | 12,286 | 8,819 | 8,123 | 8,183 | 7,304 | 4,584 | 3,189 |
| April | 11,863 | 8,596 | 8,376 | 8,238 | 6,690 | 4,269 | 3,122 |
(Source: AMFI)
Details of new SIPs registered and discontinued during FY 22-23 are as under : (SIP Count in Lakh)
| Month | Total No. of outstanding SIP Accounts | No. of New SIPs registered | No. of SIPs discontinued/ tenure completed | SIP AUMRs crore | SIP ContributionRs crore |
|---|
| Apr 22 – Sep 22 | 583.77 | 121.71 | 65.67 | 6,35,286 | 74,234 |
| Sep 22 | 583.77 | 23.66 | 11.50 | 6,35,286 | 12,976 |
| Aug 22 | 571.61 | 21.13 | 11.46 | 6,39,787 | 12,693 |
| Jul 22 | 561.94 | 17.42 | 10.37 | 6,09,296 | 12,140 |
| Jun 22 | 554.89 | 17.93 | 11.45 | 5,51,189 | 12,276 |
| May 22 | 548.41 | 19.75 | 10.36 | 5,65,706 | 12,286 |
| Apr 22 | 539.02 | 21.82 | 10.53 | 5,78,086 | 11,863 |
| | | | | |
| Apr 21– Mar 22 | 527.73 | 266.36 | 111.17 | 5,76,358 | 1,24,566 |
(Source: AMFI)
All about SIP
SIP 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.
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.
Rupee cost averaging feature of SIP allows investors to buy more units of a mutual fund when the market is low and reduce the per-unit cost of investment.
By inculcating discipline (to invest regularly) and by limiting investments to a fixed amount, SIPs ensure investors don’t go overboard during good times and don’t stop investing during bad. By eliminating the need to time of the market, SIPs mitigate the risk of investors entering at the wrong time.
Investing in SIPs for long periods would result in purchase of stocks at various valuations, which would average out to mean.
Thus, SIP is a good way of accumulating mutual fund units on a periodic basis and over market cycles to create wealth in the long term.
