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Business News/ Mutual Funds / Inflows into mutual fund SIPs continue to spike. These are the 5 key reasons
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Inflows into mutual fund SIPs continue to spike. These are the 5 key reasons

Inflows into systematic investment plans (SIPs) of mutual funds spiked to ₹18,838 crore in Jan 2024, reflecting a jump of 36% in just one year. Consequently, total SIP assets under management have touched the highest-ever figure of ₹10.26 lakh crore.

Total SIP assets under management (AUM) has touched ₹10.26 lakh crore.Premium
Total SIP assets under management (AUM) has touched 10.26 lakh crore.

Inflows into systematic investment plans (SIPs) of mutual funds have jumped to 18,838 crore in Jan 2024, reflecting a jump of 36 percent in just one year’s time.

A year prior to this, the corresponding figure for SIP inflow stood at 11,517 crore and two years before, inflows into SIPs stood at 8,023 crore.

Consequently, total SIP assets under management (AUM) have touched 10.26 lakh crore, 43 percent in just nine months when it stood at 7.17 lakh crore, shows the AMFI data. At the same time, the number of new SIPs registered hit a milestone of 51,84,057 in January 2024. In fact, the number of SIP accounts was also the highest ever at 7,91,71,394 last month.

ALSO READ: Mutual funds: Total SIP inflows in 2023 hit 1.83 lakh crore, up 23% over previous year

“It's a positive trend but in our view, we are just scratching the surface since the penetration of mutual funds in India is barely 5 percent only. Most investors have realised that equity is important for wealth creation and SIP is the right tool to invest," says G Pradeepkumar, CEO of Union Asset Management Company.

Jan data       SIP inflow ( crore) Increase (%)
2023-24                                18,83836%
2022-23                          13,85620%
2021-22                                      11,51743%
2020-21                                  8,023--

(Source: AMFI)

Total AUM of SIP inflow has jumped to 10.26 lakh crore, whereas it stood at 7.17 lakh crore merely nine months ago.

These are the key reasons for the spike:

1. Bull run: A large number of investors have invested during the bull run to make the most of the rally, particularly in equity schemes.

2. Investing discipline: Increasingly, investors have made handsome gains in the recent past, thus incentivising the habit of investing on a regular basis.

“Investors understand that mutual funds offer risk management better than direct equity. They also know that SIP provides the benefit of Rupee Cost Averaging," says Preeti Zende, a Sebi-registered investment advisor and founder of Apna Dhan Financial Services.

3. Exposure and awareness: A number of awareness activities are conducted on a regular basis to teach investors about the benefits of regular investing via SIPs.

4. Long term financial goals: Those who have long term financial goals have increasingly raised their exposure to equity and in mutual funds in general. This has led to continuous jumps in the SIP amounts.

5. Higher retail participation: It is interesting to note that most new mutual fund investors are retail investors. The latest AMFI data shows that equity-oriented schemes derive 88 percent of their assets from individual investors.

Additionally, individual investors now hold a relatively higher share of mutual fund industry assets i.e., 60.1 percent in January 2024 as compared to 57.3 percent in Jan 2023.

 

 

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Published: 28 Feb 2024, 12:05 PM IST
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