Net SIP inflows decline to 42% of the gross SIP inflows

SIP investors are booking profits. An analysis of industry data shows that the net SIP inflows displayed a declining trend in the first quarter of FY 2024.

While the gross SIP inflows have increased in the first three months compared to the corresponding period previous year, the net SIP numbers have declined drastically. The net-to-gross SIP inflow ratio declined from 64% in April-June 2022 to 42% in April-June 2023.

Collectively, the MF industry received Rs 18,281 crore net SIP inflows as against gross inflows of Rs 43,211 crore.  Let us look at the table to know more:

* Figures in crore

In addition to profit booking, there are other reasons that weakened the net SIP inflows.   

Chennai MFD Chokkalingam Palaniappan of Prakala Wealth said that when the market rises, investors usually pull out money from equities and invest in debt to rebalance their investment portfolio.

Mumbai MFD Sadashiv Phene said that many investors have discontinued SIP to make big purchases. He said, “I have come across a decent number of investors who booked profits recently for making down payment of physical assets like residential houses. They funded the balance amount through borrowings which in turn has created EMI obligations. These investors stopped their SIPs to service such financial commitments.”

Further, a category-wise analysis as on June 2023 shows that solution-oriented schemes have the highest net-to-gross ratio of 63% and growth/equity schemes reported the least at 36%.  

* Figures in crore

* Other schemes include FOF-Domestic

Overall, the SIP AUM and live SIP accounts stood at Rs 7.94 lakh crore and 6.65 crore as on June 2023.