MF industry has witnessed a sharp decline in the number of new SIP registrations with 8.49 lakh new SIP registrations in March. This is much lower than 11.39 lakh new SIPs in February. In fact, the number of new SIPs has been the lowest in the last 13 months.
Meanwhile, the number of discontinued/completed SIPs also witnessed a marginal increase. The number of discontinued and completed SIPs stood at 6.02 lakh in March, as against 5.74 lakh in February.
As a result, the net increase in SIP registrations, which is new SIP registered minus discontinued or completed SIPs, has shrunk to 2.47 lakh, the lowest in FY 19-20.
(SIP count in lakh)
|
Month |
No of new SIPs registered |
No of stopped/ completed SIPs |
Net change |
|
March |
8.49 |
6.02 |
2.47 |
|
Feb |
11.39 |
5.74 |
5.65 |
|
Jan |
12.07 |
5.95 |
6.12 |
|
Dec |
9.62 |
5.91 |
3.71 |
|
Nov |
10.89 |
5.55 |
5.34 |
|
Oct |
10.03 |
5.3 |
4.73 |
|
Sep |
8.5 |
5.63 |
2.87 |
|
Aug |
8.8 |
5.83 |
2.97 |
|
Jul |
10.19 |
5.63 |
4.56 |
|
Jun |
9.29 |
5.4 |
3.89 |
|
May |
9.65 |
5.86 |
3.79 |
|
Apr |
9.02 |
5.4 |
3.62 |
Industry experts attributed this decline to worsening investor sentiment and operational challenges due to the nationwide lockdown.
Sunil Subramaniam, MD, Sundaram MF attributed the decline in new SIP registrations to the disruption in banking channel. He said that most banks are operating with minimum manpower which has affected new SIP registration in the MF industry.
Further, industry experts pointed out that the recent KYC norms have also acted as a dampener for new SIP registrations. Many existing investors have seen their SIP discontinuing due to pending KYC status. According to the new norms, investors cannot execute any financial transaction and make non-financial requests if their KYC status is incomplete or pending. Investors will have to get status of ‘KYC Verified’ or ‘KYC in process’to execute financial transactions like fresh purchase, redemption and so on and place non-financial requests like change in bank, address or name.
Mumbai distributor Sadashiv Phene feels that lockdown has affected the new SIP registrations. He said that distributors cannot reach out to new investors at this point. Further, some of the existing investors are unwilling to top up their SIP as their investment portfolio is deep in the red. Phene said, “Some of the schemes have delivered negative returns even after 5 year of investment. This has been discouraging for many investors since they expect that MF investments to deliver attractive returns in long term. Moreover, since clients have more time these days, many of them keep looking at their portfolio and falling prey to all sorts of market noise.”
Chandresh Nigam, MD & CEO, Axis MF said that the recent decline in new SIPs is a combination of infrastructure challenges and market turmoil. Fund houses are finding it challenging to onboard new clients through the physical mode because of closure of offices. Moreover, the recent correction in equities has also made investors nervous and hampered new SIP registrations.
