SIP inflows cross ~10,000 cr
But debt-oriented schemes witness ~63,910-crore outflows in September
Inflows into the mutual fund industry through the systematic investment plan (SIP) route crossed ~10,000 crore for the first time in September. Investors opened over 2.6 million SIP accounts during the month and the assets under management (AUM) of SIPS rose to ~5.44 trillion, from ~5.26 trillion at the end of August.
SIP is an investing technique wherein an 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 equityoriented schemes log net inflows for the seventh consecutive month. In September, net equity inflows stood at ~8,677 crore, the data released by the Association of Mutual Funds in India (Amfi) on Friday showed.
Market participants say that with the continuous surge in the markets over the last few months, investors have preferred SIPS to 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, have been choosing SIPS for 12 or 24 months. This is the reason why SIPS have continued to gain over the past few months,” said Sunil Subramaniam, managing director, Sundaram.
Besides SIPS, the launch of new fund offers (NFOS) and up-move in stocks boosted inflows and AUM.
In September, five equity NFOS collected ~6,579 crore. In the previous month, NFOS added nearly ~6,900 crore to the equity inflow tally.
In September, the benchmark Sensex rose nearly 3 per cent. Over the past year, the index has surged over 50 per cent.
“Rising SIP contributions are due to a mix of the equity markets performance and launch of NFOS over the past few months. Until there is liquidity in the markets, flows will remain positive,” said D P Singh, chief business officer at SBI MF.
Of the 11 equity categories, four categories — small-cap, dividend yield, value, and equity-linked saving schemes (ELSS) — saw net outflows. Multi-cap and thematic funds saw the strongest inflows of ~3,569 crore and ~2,618 crore, respectively.
Meanwhile, debt-oriented schemes saw net outflows of around ~63,910 crore in September. Investors also pull money out from short-term debt categories like liquid funds, ultra-short duration, low-duration, and money market funds. Industry players said large outflows from the debt segment were a quarter-end phenomenon. Typically, large institutions — such as banks and corporates — redeem their MF investments to pay quarterly advance taxes.
“A 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, cochief business officer, Nippon India Mutual Fund.
Overall, the MF industry saw net outflows of ~47,257 crore and AUM as of September stood at ~36.73 trillion.