In a positive turn for the mutual fund industry, the Systematic Investment Plan (SIP) stoppage ratio has declined to a 9-month low of 62.66% in July. This marks a significant improvement from the peak of 352.00% observed in April, signaling a potential shift in investor behavior and market dynamics.

SIP Stoppage Ratio Trends

The SIP stoppage ratio, which indicates the rate at which investors are discontinuing their systematic investments, has shown a notable downward trend. After reaching an alarming high of 352.00% in April, primarily due to reconciliation and cleanup of defunct mutual fund folios, the ratio has now settled at a more encouraging 62.66% in July.

Contributing SIP Folios on the Rise

One of the most promising developments is the substantial increase in contributing SIP folios. The percentage of active SIP folios has risen to an impressive 96.42% in July, up from under 80.00% earlier. This surge has resulted in a total of 911 lakh contributing SIP folios, reflecting growing investor participation and confidence in the mutual fund market.

Monthly SIP Contributions and AUM

The mutual fund industry continues to show robust growth, with monthly SIP contributions reaching ₹28,464 crore in July. This steady inflow has played a crucial role in supporting the total mutual fund Assets Under Management (AUM), which now stands at a substantial ₹75.3 lakh crore.

Factors Influencing SIP Discontinuations

Despite the positive trends, experts note that several factors continue to influence SIP discontinuations:

• Market volatility
• Liquidity pressures
• Profit booking

However, industry observers remain optimistic, pointing out that many investors tend to return to SIPs once market conditions stabilize.

Historical Context

It's worth noting that the mutual fund industry experienced a significant event earlier when the total SIP folios dipped below 10 crore. This decrease was attributed to a comprehensive reconciliation and cleanup process of defunct mutual fund folios, leading to the unusually high stoppage ratio in April.

Expert Outlook

While the current trends are encouraging, financial experts emphasize the importance of long-term investment strategies. They advise investors to view market fluctuations as opportunities rather than threats, especially when it comes to systematic investment plans.

The declining SIP stoppage ratio, coupled with the increase in contributing folios, suggests a maturing investor base that is becoming more aligned with the principles of disciplined, long-term investing. As the market continues to evolve, it will be interesting to see how these trends shape the future of mutual fund investments in India.

Systematic Investment Plan (SIP) contributions in India have reached unprecedented heights, hitting a record ₹28,464 crore. This marks the second consecutive month of record-breaking inflows, following the previous month's impressive ₹27,000 crore milestone.

Equity Funds Witness Extraordinary Growth

Equity-oriented mutual funds experienced a remarkable surge, with net inflows skyrocketing to ₹42,672 crore, nearly doubling from ₹23,568 crore in the previous month. This substantial increase was bolstered by New Fund Offer (NFO) collections, which amounted to ₹30,416 crore from 30 schemes.

Investor Preferences Shift Towards Mid and Small-Caps

Investors displayed a clear preference for mid-cap and small-cap categories, which saw inflows of ₹5,182.50 crore and ₹6,484.40 crore respectively. In contrast, large-cap funds attracted a comparatively modest ₹2,125.00 crore.

Sectoral and Thematic Funds Lead the Pack

Among equity categories, sectoral and thematic funds emerged as the frontrunners, recording net inflows of ₹9,426.00 crore. However, Equity-Linked Savings Scheme (ELSS) funds experienced a setback with net outflows of ₹368.00 crore.

SIP Account Growth and AUM

The popularity of SIPs continues to soar, with over 61.91 lakh new SIP accounts registered recently. This surge brought the total number of outstanding SIP accounts to an impressive 919.32 lakh. SIP assets under management (AUM) stood at ₹15.30 lakh crore, representing approximately 20% of the mutual fund industry's total AUM.

Key Highlights

This record-breaking performance in SIP contributions and equity fund inflows underscores the growing confidence of Indian investors in mutual funds as a vehicle for long-term wealth creation. The shift towards mid-cap and small-cap funds suggests an increased appetite for potentially higher returns, albeit with higher risk. As SIPs continue to gain traction, they are playing an increasingly significant role in India's mutual fund landscape, accounting for a substantial portion of the industry's total AUM.