SIP inflows cross Rs 10,000 cr-mark for first time in a month in Sept

Equity inflows stood at Rs 8,677 cr; Debt segment saw outflows of Rs 63,910 cr

Inflows into the mutual fund industry through the systematic investment plan (SIP) route crossed Rs 10,000 crore for the first time in September. Investors opened over 2.6 million new SIP accounts during the month. The assets under management (AUM) of SIPs rose to Rs 5.44 trillion from Rs 5.26 trillion at the end of August.

SIP is an investing technique wherein the investor commits a fixed sum every month as opposed to investing a large sum at one go. Sustained inflows through this route has provided the domestic mutual fund (MF) industry a solid foundation for growth.

Strong SIP flows helped equity-oriented schemes log net inflows for the seventh consecutive month. In September, net equity inflows stood at Rs 8,677 crore, data released by industry Association of Mutual Funds in India (Amfi) on Friday showed.

Market participants say that with continuous surge in the markets in the last few months, investors have preferred SIPs over lump sum investments.

“Investors having surplus money are being advised by their advisors and distributors to stagger their investments given the current valuations of the markets. Many, who want to do lump sum investing, are choosing SIPs for 12 or 24 months. This is the reason why SIPs have continued to gain in the last few months,” said Sunil Subramaniam, managing director, Sundaram.

Besides SIPs, launch of new fund offers (NFOs) and up move in stocks also boosted inflows and AUM.

In September, five equity NFOs collected Rs 6,579 crore. In the previous month, NFOs had added nearly Rs 6,900 crore to the equity inflow tally.

In September, the benchmark Sensex rose nearly 3 per cent. In the last one-year, the index has surged over 50 per cent.

“Rising SIP contributions are due to a mix of equity markets performance and launch of NFOs in the last few months. Till the time there is liquidity in the markets, flows will continue to remain positive,” said DP Singh, chief business officer at SBI MF.

Out of the 11 equity categories, four categories smallcap, dividend yield, value and equity-linked saving schemes (ELSS) saw net outflows. While multicap and thematic funds saw highest flows of Rs 3,569 crore and Rs 2,618 crore, respectively.

Meanwhile, debt-oriented schemes saw net outflows of around Rs 63,910 crore in September. Short term debt categories like liquid funds, ultra-short duration, low-duration and money market funds saw sharp outflows. Industry players said large outflows from the debt segment was a quarter-end phenomenon. Typically, large institutions such as banks and corporates redeem their MF investments to pay quarterly advance taxes.

“Few institutional investors redeemed from short to medium debt funds on concerns that the RBI policy announcement on October 8 may impact bond yields and hit short term performance,” said Aashwin Dugal, co-chief business officer, Nippon India Mutual Fund.

Overall, MF industry saw net outflows of Rs 47,257 crore and assets under management as on September stood at Rs 36.73 trillion.