The curious effect of mutual fund SIPs on Sensex, Nifty
Monthly inflows from mutual fund SIPs have more than doubled in the past two years and now stand at 7,658 crore. This is despite the correction in the markets this year
Retail flows into equity mutual funds have historically followed a predictable pattern. Flows rise when the markets are doing well, and they fall when the markets are correcting. And in what is a clear reflection of the investment time horizon in this category, the key yardstick that is followed is the past one-year return of equity mutual funds. Whenever one-year returns are poor for successive months, flows dry up and there are even net outflows from equity mutual funds, as was witnessed in early 2014 and 2016.