 "SIP inflows")
Investors continued their love affair with Systematic Investment Plans (SIPs) in April 2024, with total SIP inflows hitting a record high of Rs 20,371 crore, reflecting a 6.7% increase compared to the three-month average. This marks the 10th consecutive month where SIP inflows surpassed Rs 15,000 crore, showcasing sustained investor interest, showed data analysed by brokerage Geojit Insights.
The number of active SIP accounts reached a record high of 8.70 crore in April, marking a 6.5% increase compared to the 3-month average. This represents a significant year-on-year jump of 35.5%, highlighting a surge in new account creation.
The average SIP size rose by 9.6% year-on-year, reaching an estimated Rs 2,340 per SIP. This indicates investors are potentially increasing their monthly contributions.
April witnessed an all-time high of 63.7 lakh new SIP registrations, a 32.1% increase compared to the 3-month average. However, SIP discontinuations also reached a record high of 33.25 lakh, indicating some churn within the investor base. Despite this, net SIP additions remained at an all-time high of 30.4 lakh, reflecting continued investor participation.
SIP AUM at record levels:
SIP Asset Under Management (AUM) reached a new high of Rs 11.26 lakh crore in April, showcasing a significant 57% year-on-year growth.
More From This Section
This translates to SIPs contributing 19.7% of the total mutual fund AUM and a substantial 35.2% of open-ended equity-oriented AUM. This data suggests SIPs play a major role in driving equity market participation. The sustained growth in inflows, accounts, and AUM suggests investors are increasingly utilizing SIPs to build wealth over the long term.
While the SIP cancellation ratio remains elevated, the high net SIP additions indicate continued investor confidence in the markets.
The Indian Mutual Fund industry also witnessed a bonanza of net inflows in April 2024, reaching a five-year high of Rs 2.39 lakh crore, the report added.
Open-Ended Schemes Drive Growth:
The net inflows were primarily driven by open-ended equity, debt, and hybrid schemes, signifying investors' preference for long-term wealth creation through these instruments. Notably, close-ended equity and debt funds experienced net outflows during the same period.
Equity Funds See Inflows Despite Volatility:
Equity funds witnessed net inflows of Rs 18,888 crore, reflecting continued investor interest in the stock market. However, the inflows were down by 20% compared to the 3-month average, indicating some caution amidst market volatility. Gross purchases increased by 2.2% compared to the 3-month average, while redemptions spiked by 19.7%.
Sectoral trends in equity funds
Top Performers: These funds, which invest in specific sectors or themes (like technology, healthcare, infrastructure), continued to attract investor interest with net inflows of Rs 5,166 crore. This represents the fifth-highest inflow for this category in the past 3 and 5 years. However, it's important to note that these inflows are down by 35% compared to the 3-month average, suggesting some cooling off in investor enthusiasm for these funds.
Multicap Funds: These funds invest across companies of all market capitalizations (large, mid, and small). They saw healthy net inflows of Rs 2,724 crore, reflecting a 12.2% increase compared to the 3-month average.
Large & Midcap Funds: These funds focus on companies with larger and mid-sized market capitalizations. They witnessed net inflows of Rs 2,639 crore, marking the fourth-highest inflow for this category in over five years. However, similar to Sector/Thematic funds, inflows were down by 9% compared to the 3-month average.
Smallcap Funds: These funds invest in companies with smaller market capitalizations. After a period of outflows, smallcap funds returned to positive territory with net inflows of Rs 2,209 crore in April. This represents a 9% increase compared to the 3-month average.
Outflows:
ELSS Funds (Equity Linked Savings Schemes): These tax-saving equity funds experienced net outflows of Rs 144 crore in April. This is a shift from the net inflows observed in the previous 3-month average. This could be due to various reasons, such as investors having already fulfilled their tax-saving requirements for the financial year or a preference for other investment options.
Focused Funds: These funds invest in a concentrated portfolio of a limited number of stocks. They witnessed net outflows of Rs 328 crore, representing a significant increase of 47% compared to the 3-month average outflows. This suggests that some investors might be taking a more cautious approach towards this high-conviction investment strategy.
Close-Ended Equity Funds: These funds have a fixed lock-in period and typically invest in a specific strategy. April saw net outflows of Rs 29 crore, which is a substantial decrease of 66% compared to the average outflows observed in the past 3 months.
.Debt funds make a strong compeback:
Debt funds stole the show in April, recording net inflows of a staggering Rs 1.89 lakh crore – the highest in over five years. This surge indicates a renewed investor appetite for fixed-income instruments, particularly liquid funds, money market funds, and overnight funds. However, medium duration, banking & PSU, and credit risk funds experienced net outflows.
Top Performers in Debt Funds:
Liquid Funds: As is customary at the beginning of a quarter, liquid funds attracted the most inflows (Rs 1.03 lakh crore) – the highest ever recorded in over five years. Investors often use liquid funds for short-term goals or as a parking place for their money.
Money Market & Overnight Funds: Money market funds (Rs 34,084 crore) and overnight funds (Rs 21,195 crore) also witnessed their best inflows in over five years. These funds offer slightly higher returns than liquid funds but with slightly less liquidity.
Outflows in Debt Funds:
Medium Duration, Banking & PSU, Credit Risk: While debt funds saw a surge in inflows overall, some categories experienced net outflows. Medium duration funds (Rs-425 crore) witnessed the highest outflows, which is a five-year low. Banking & PSU funds (Rs-405 crore) and Credit Risk funds (Rs-359 crore) also saw outflows, indicating that some investors might be cautious about interest rate movements or credit risks associated with these specific debt segments.
Close-Ended Debt: Close-ended debt funds experienced net outflows of Rs 554 crore, but this is a significant decrease compared to the average outflows in the past 3 months. This could be due to fewer redemption opportunities for these funds.
Hybrid Funds See Strong Inflows:
Second-Highest Inflows: Hybrid funds, which combine equity and debt components, garnered net inflows of Rs 19,863 crore, marking the second-highest inflow for this category in over five years. This suggests investor interest in a balanced approach between growth potential and income generation.
Top Performers in Hybrid Funds:
Arbitrage Funds: Arbitrage funds, which exploit price inefficiencies between different markets, were the top performers within hybrid funds with net inflows of Rs 13,901 crore – the second-highest inflow ever recorded for this category.
Multi-Asset Allocation Funds: Multi-asset allocation funds, which invest in a diverse mix of assets, also saw healthy inflows of ₹3,313 crore, ranking fourth-highest in over five years.
Solution Funds and Other Funds:
Solution Funds: Solution-oriented funds, designed for specific goals like retirement or children's education, received net inflows of ₹247 crore, which is near the highest levels observed in the past 3 and 5 years. This indicates investor interest in planning for their future financial needs.
Other Funds: Other funds, including index funds and other ETFs (Exchange Traded Funds), saw net inflows of Rs 11,505 crore, reflecting a 30% increase compared to the 3-month average.
Index Funds: Index funds, which track a specific market index, witnessed a significant jump in inflows (Rs 6,524 crore) – a 166% increase from the 3-month average. This highlights the growing popularity of passive investing strategies.
Outflows: However, some other funds within this category experienced outflows. Overseas Feeder Funds (₹-370 crore) and Gold ETFs (₹-396 crore) saw outflows near their five-year lows.
New Fund Offerings (NFOs):
Lower Sales: New fund offerings (NFOs) saw total sales of Rs 1,532 crore across nine schemes. This represents a significant decline of 80% compared to the 3-month average. This suggests a slowdown in the launch of new mutual fund schemes or a decrease in investor interest in these offerings.
NFO Collection Mix:
Equity Dominates: Equity funds (79.6% of NFO collections) were the most popular category for new fund offerings. This indicates that some asset managers are still looking to capitalize on investor interest in the equity markets.
Index Funds Gain Traction: Index funds (17.6% of collections) also saw a decent share of NFO inflows.
Other Schemes: The remaining NFO collections came from other types of schemes.
Increase in Open-Ended Schemes:
The total number of mutual fund schemes stood at 1,545. Notably, open-ended schemes (1,426) witnessed a significant increase of 141 (or 11%) compared to the previous year. This suggests that asset managers are launching more open-ended schemes, which offer investors greater flexibility compared to close-ended schemes.
Decline in Close-Ended Schemes: Conversely, the number of close-ended schemes (119) decreased by 48 compared to the previous year.
Equity leads the way
Equity schemes saw the highest growth in open-ended schemes year-on-year, with an increase of 52 schemes. A significant portion of this growth (nearly 34 schemes) came from the launch of new Sector/Thematic funds.
Other categories like Multi-Asset Allocation, Index Funds, Other ETFs, and Overseas Feeder Funds also witnessed an increase in the number of open-ended schemes, but to a lesser extent compared to Equity funds.
