Home / Money / Calculators /  Actual SIP numbers may be lower due to bounce rate

The net inflows into the systematic investment plans (SIPs) in May 2020 stood at 8,123 crore, only marginally lower than the 8,376 crore recorded in April. The SIP inflows seemed to have held up despite an economic shock caused by the nationwide lockdown.

However, a detailed analysis of the number suggests that bounced SIPs may not have been factored in. An SIP ‘bounce’ is a failure to debit the customer’s bank account for a scheduled SIP due to insufficient balance. Such a bounce in some cases attracts charges from banks.

In a media presentation last month, Aashish Sommaiyaa, MD and CEO, Motilal Oswal AMC suggested that the AMFI monthly flow data should be crosschecked with the SIP assets under management (AUM) data, which is also disclosed by the same body. A mismatch between the two may be partially on account of bounced SIPs.

The SIP AUM rose from 2,75,983 crore in April to 2,76,218 crore in May, which is a rise of just 235 crore. However, monthly SIP flows disclosed by AMFI was several multiples higher at 8,123 crore in May. So where did 7,889 crore go?

One explanation could be market drop which has the effect of reducing AUM. Over this period (1 May to 31 May) Sensex fell by 3.84% and Nifty fell 2.84%. "I’m not sure if you can attribute Sensex decline and compare it to AUM decline. Equity scheme SIPs are across large, mid and small caps. The market movement can vary scheme to scheme," said a spokesperson for Computer Age Management Services (CAMS), a registrar and transfer agent.

Only a detailed disclosure from AMFI will provide clarity on the matter.


Neil Borate

Neil heads the personal finance team at Mint. A former colleague called them 'money nerds' and that's what they are. They cover topics like mutual funds, taxation and retirement, all to improve your chances of building wealth. Neil graduated with a degree in law and economics. He passed the CFA Level I exam and began his writing career at Value Research, a mutual fund research firm in 2016. He joined the personal finance team Mint in 2019. Everyday, the Mint Money Team tackles personal finance questions such as where to invest and where to borrow, through articles, charts and reader queries. They also have a daily podcast - 'Why Not Mint Money' and an annual ranking of mutual funds - the Mint 20.
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