Net to gross SIP ratio in equity and hybrid funds is less than 50%

Industry data shows that the net to gross ratio of 4 out of 5 fund categories declined in FY 2024. 

The data shows that the MF industry saw reduction in net to gross SIP ratio in equity funds, hybrid funds, solution oriented funds and index funds/ETFs. 

However, the industry recorded improvement in net to gross SIP ratio of debt schemes. 

Equity funds

The net to gross SIP ratio in equity funds reduced substantially from 53% in FY 2023 to 42% in FY 2024.

Despite an increase in total gross inflows from Rs.1.31 lakh crore  to Rs. 1.65  lakh crore, the industry recorded decline in net inflows in FY 2024.

In the final quarter of FY 2024, the equity schemes experienced the highest gross inflows exceeding Rs. 15,000 crore each month. However, the net inflows in this period were between Rs. 6,400 crore to Rs. 7,000 crore.

Let’s check the table for more details:

Debt funds

The net to gross ratio increased from 38% in FY23 to 49% in FY24. 

While the monthly gross SIP inflows from Rs. 5,000 crore went up to Rs. 8,800 crore in one year, net inflows also witnessed a notable surge, climbing from Rs. 2,000 crore to Rs. 4,200 crore. 

Let’s check the table for more information on debt category:

Hybrid funds

In hybrid schemes, the net to gross ratio declined from 52% in FY 2023 to 47% in FY 2024.

In absolute terms, despite 29% increase in monthly gross inflows from Rs.10,500 crore in March 2023 to Rs.13,500 crore in March 2024, the monthly net inflows grew by 19% in FY 2024.

For more details on hybrid funds, please refer to the table below.

Solution oriented Schemes:

Solution-oriented schemes saw the lowest decline in net to gross SIP inflows as against other categories. The net to gross ratio decreased from 69% in FY 2023 to 65% in FY 2024.

Let’s look at the table to know more about solution oriented category:

Index fund/ETFs

In this category, the net to gross ratio decreased from 71% in FY23 to 61% in FY24. 

The industry saw gross SIP inflows of Rs. 10150 crore as against net SIP inflows of Rs.6150 crore during FY 2024

Let’s see the table to know more about other scheme categories:

Gaurab Parija, Head - Sales and Marketing, Bandhan MF attributed this trend to profit booking from equity category. “Majority of SIP inflows come into equity funds. Since equity funds did well last year, many people booked profit from their SIP accounts.”

Makhdoom Ansari, National Head of Retail Sales at Mirae Asset MF believes that common human psychology is to redeem their investments when the market is at its peak valuation. “When the stock markets are doing well, many investors put their money into the high-risk equity category. As stock prices rise, they often sell to make a profit. This can cause a lot of money to flow in and out of equity funds, which might be why the net to gross ratio is declining.”

"Redemptions occur for several reasons, including investors lacking discipline in their investments, particularly when using direct platforms. Additionally, some investors tend to cash out when they need funds,” said Ansari.