Investment via SIP rises 5.2 pc to over Rs 8,500 cr in Feb

The mutual fundindustry garnered over Rs 8,500 crore through systematic investment plans (SIPs) in February, a rise of 5.2 per cent from the year-ago period, even as the broader market witnessed heavy volatility amid concerns over the impact of coronavirus pandemic. With this, the total SIP contribution in the first 11 months of the current financial year rose to Rs 91,443 crore as compared with Rs 84,638 crore in April-February 2018-19, according to the latest data from the Association of Mutual Funds in India (Amfi). SIP continued to be the preferred route for retail investors to invest in mutual funds as it helps them reduce market timing risk, the industry body noted.

According to the data, SIP contribution in February stood at Rs 8,513crore, which was higher than Rs 8,095 crore clocked in the same month last year. However, the 44-player mutual fund industry, which mainly depends on SIPs for inflows in equity funds, saw a marginal drop in SIP investments as compared to the preceding month.

In January this year, the industry collected Rs 8,532 crore, while the SIP contribution in December stood at Rs 8,518 crore and Rs 8,273 crore in November. Inflows into SIPs have averaged over Rs 8,200 crore for the 12 months till February. Strong inflows through SIP route have also helped in raising investment in equity mutual funds to 11-month high of Rs 10,730 crore in February. This is the highest investment since March 2019, when equity schemes attracted an inflow to the tune of Rs 11,756 crore.

As the spread of coronavirus pandemic scared global equities, Indian stock market too found itself in the grip and registered a fall of almost 6.5 per cent (for S&P BSE 100) last month.

Market experts believe that positive inflow indicates building up of a positive investment trend.

"We expect continued buoyancy in SIP flows in March too, though a few institutional investors may reassess their investment strategy, given the deep correction in markets," Amfi Chief Executive N S Venkatesh said.

"Individual investors continue to repose trust in the equity market, investing through mutual funds via the SIP route and I am happy to note that SIP monthly contributions have breached the Rs 8,000 crore mark for the 15th consecutive month," he added.

In the past few years, investment through SIPs has been rising as an inflow of Rs 92,693 crore through the mode was seen in 2018-19, over Rs 67,000 crore in 2017-18 and more than Rs 43,900 crore in 2016-17. Currently, mutual funds have 3.09 crore SIP accounts through which investors regularly invest in Indian mutual fund schemes. The industry, on an average, added 9.95 lakh SIP accounts each month during the current financial year, with an average ticket size of Rs 2,750.

SIP is an investment vehicle that allows investors to invest in small amount periodically instead of lump sum payment. The frequency of investment is usually weekly, monthly or quarterly. It is similar to a recurring deposit where investors deposit a fixed amount every month.

Overall, mutual fund schemes witnessed an outflow ofRs 1,985 crore last month across all segments,  mainly owing to withdrawal from liquid or money market segments.

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The outflow has pulled down the asset base of the mutual fund sector to Rs 27.23 lakh crore at February-end from Rs 27.86 lakh crore at the end of January.