SIP inflows fall for the sixth consecutive month in September

SIP inflows fell for the sixth straight session in September to Rs.7,788 crore. The industry raised Rs.7,792 crore through SIP route in August, Rs.7,831 crore in July, Rs.7,917 crore in June, Rs. 8,123 crore in May and Rs. 8,376 crore in April.

Experts attribute this to the challenging economic and market conditions, which has resulted in many investors   pausing their SIP.

"Due to conditions like layoffs and pay cuts, many investors choose to pause SIPs,” Jimmy Patel, MD & CEO, Quantum MF. Further, he added, “Most investors who have invested through SIPs for 3-5 years were disappointed with the returns, which consequently led to many redemptions.”

Further, fresh inflows through SIP is said to have dried up as many first time investors have shown interest in buying direct equity. During April- September 2020, 63 lakh new demat accounts were added as compared to 27.4 lakh accounts during the corresponding period last year, i.e. an increase of around 130%.

Nevertheless, many industry experts feel that the industry can still take heart from these numbers and expect a quick revival in coming days.

Swarup Mohanty, CEO at Mirae Asset MF said that considering the unprecedented economic situation, we can take heart from the fact that SIP inflows did not fall significantly. "Now, many retail investors who used to park their money only in bank FDs are now opting for safer products such as banking & PSU funds and corporate bond funds. This is a good sign for the industry. Moreover, given India’s demography, I expect more young people to opt for financial products like mutual funds. So, we can expect the numbers to improve significantly in the coming months,” he added.

Meanwhile, overall SIP AUM rose to Rs. 3.35 lakh crore in September from Rs.2.75 lakh crore in April, largely due to the mark to market gains in equity schemes.