Latest AMFI data shows that the monthly inflows in mutual funds through SIPs have declined consecutively for the fifth month.
SIP inflows fell by nearly 10% since March i.e. from Rs.8,641 crore in March to Rs.7791 crore in August. However, the total number of SIP folios saw a marginal jump of 6% from March to reach 3.30 crore SIP accounts in August. Currently, SIP AUM of the MF industry stood at Rs.3.36 lakh crore i.e. 12% of the total MF AUM.
Industry experts attribute this decline in SIP inflows to financial constraint trigged by covid-19 pandemic and underperformance of a few equity funds.
A senior MF official requesting anonymity said that investors who invested in underperforming equity funds through SIPs have discontinued SIPs due to their underperformance. “Many investors have not made money through SIPs despite staying invested in mutual funds through SIPs for over 5 years. This tells a lot about the decline in SIP inflows.”
“Many investors have stopped their SIPs after witnessing capital erosion despite investing for 3 years. It is difficult to retain these investors especially when many people are facing financial constraint due to job loss, salary cut and delay in salary,” said Mumbai MFD Sadashiv Arvind Phene.
Swarup Mohanty, CEO, Mirae Asset MF believes that the trend will continue for a few more months. He said that many investors may face financial constraints till March 2021.
George Heber Joseph, CEO and CIO ITI MF feels that it might take two years for the economy and investments cycle to be back on track. He said, “Currently, many individuals have been struggling to survive. Another key reason for slowdown in SIP inflows is the rally in the equity market. It is fine to book profit and save some cash for exigencies considering the current economic scenario.”
G. Pradeepkumar, CEO, Union MF said that revival in economy may start from January 2021 when the pandemic situation might clear. “Also, mutual funds are more liquid than other asset classes like real estate and hence, many people are redeeming their investments. This shows people are desperately in need of money,” said Pradeep.
|
SIP monthly inflow |
in crores |
|
March |
8,641 |
|
April |
8,376 |
|
May |
8,123 |
|
June |
7,917 |
|
July |
7,830 |
|
August |
7,791 |
