The influx of SIP continues to decline in a difficult economic environment


Investments in mutual funds through systematic investment plans (SIPs) fell for the fifth consecutive month to Rs 7,791 crore in August, amid a tough economic environment due to the COVID-19 pandemic.

Equity mutual funds, which mainly rely on SIP for flows, recorded a withdrawal of Rs 4,000 crore in August, far higher than the Rs 2,480 crore seen the previous month, according to data from the ‘Association of Mutual Funds in India (Amfi).

“SIP flows are also decreasing, it is clear that the retail investor is impacted due to the current economic environment induced by COVID-19”, said Jean-Christophe Gougeon, director (investment solutions), Sharekhan by BNP Paribas.

He added that in such a tough economic environment, retail investors tend to reduce their SIP investments and reduce the risk on their portfolios by selling equity mutual funds (MFs).

Gougeon, furthermore, said that long-term mutual funds, both lump sum and SIP, remain promising, the short-term pain is unlikely to go away anytime soon.

According to data, the industry raised Rs 7,791.6 crore via the SIP route last month, lower than the Rs 7,831 crore harvested in July.

Investment in August hit its lowest level since September 2018, when fundraising through the road stood at Rs 7,727 crore.

In addition, fundraising via SIP fell below Rs 8,000 crore in June of this year to Rs 7,917 crore. It was Rs 8,123 crore in May, Rs 8,376 crore in April and Rs 8,641 crore in March.

Entries through SIP have slowed over the past five months, but experts believe the route remains the preferred route for retail investors to invest in mutual funds because it helps them reduce the risk of market timing.

G Pradeepkumar, CEO of Union AMC, said that although the amount of SIP has decreased nominally, once again there is a net addition of about 3.43 lakh of SIP folios, indicating interest supported retail investors.

Currently, mutual funds have over 3.27 crore of SIP accounts through which investors regularly invest in Indian mutual fund programs.

SIP is an investment plan offered by mutual funds, in which one can invest a fixed amount in a mutual fund periodically at fixed intervals, once a month, instead of making a lump sum investment.

It’s similar to a recurring deposit where an investor deposits a fixed amount each month.


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