MF industry adds 11 lakh new SIP accounts in July; inflows see a slight fall

Investors continued to repose their faith in mutual funds and preferred to invest via the systematic investment plan (SIP) route to take exposure to the equity market. However, the mutual fund SIP juggernaut seems to have slowed a tad.

According to data released by the Association of Mutual Funds in India (AMFI), monthly SIP contribution in July fell to Rs 7,830 crore from Rs 7,927 crore in June. Subsequently, the number of SIPs discontinued also showed a marginal increase. The number of SIPs discontinued in July stood at 7 lakh last month as against 6.5 lakh in June.

Mutual fund managers attributed the fall in SIP inflows to deteriorating economic and jobs scenario, which may have forced investors to discontinue their SIPs.

A rise in the equity market during July has prompted a slew of investors to turn to SIPs as the industry added 11 lakh new SIP accounts last month. In comparison 9.13 lakh new investor accounts were opened in June. Last month, the Sensex gained 7.7 percent and the Nifty rose 7.5 percent.

Himadri Buch

Assistant Editor|Moneycontrol.com

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“Investor confidence in the markets continues to remain robust going by rising net fresh SIP registrations and overall mutual fund average assets under management (AAUMs) increasing since the advent of the pandemic,” NS Venkatesh, Chief Executive, Association of Mutual Funds in India (AMFI), said.

Assets under management (AUM) of mutual fund companies that have come through the systematic investment plans (SIPs) route touched Rs 3.19 lakh crore in July, an increase of 19 lakh from a month ago, according to AMFI data.

Currently, mutual funds have about 3.27 crore SIP folios through which investors regularly invest in schemes.

Overall, total AUM of the 42-player mutual fund industry stood at Rs 27.1 lakh crore in July, higher than Rs 25.5 lakh crore in June.

SIP is an investment route offered by mutual funds through which one could invest a fixed amount in a mutual fund scheme periodically at fixed intervals - say once a month -- instead of making a lump-sum investment.

An SIP instalment amount can be as small as Rs 500 per month. SIP is similar to a recurring deposit where you deposit a small/fixed amount every month.

It is a very convenient method of investing in mutual funds through standing instructions to debit your bank account every month, without the hassle of having to write out a cheque each time.

SIP has been gaining popularity among Indian MF investors as it helps in rupee cost averaging and also in investing in a disciplined manner without worrying about market volatility and timing the market.