Rising SIP collections, folios point to retail comeback in equities

According to data from the Association of Mutual Funds in India, collections from SIPs in December rose to ₹8,418 crore, the highest for a month after March 2020.

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With other avenues for investments like bank deposits yielding returns of less than 5% and gold already up 25% over last year, many are coming back to equities.
Retail investors are sticking to the staggered purchase strategy in equity mutual funds amid high valuations and soaring markets.

These investors are allocating funds to equities through the systematic transfer plan (STP), where a fixed amount is transferred from a debt fund to an equity mutual fund or the systematic investment plan (SIPs) where they invest a fixed amount every month on a particular date.

  • 5.71%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 4.5 YearsTime taken to double money
  • 7.91%Annualized Return for 3 year
  • >3 years Suggested Investment Horizon
  • 3.10 YearsTime taken to double money
According to data from the Association of Mutual Funds in India, collections from SIPs in December rose to ₹8,418 crore, the highest for a month after March 2020. The number of new registrations for SIP investments increased sharply to 14.22 lakh in December from 10.63 lakh in November, while the number of discontinued SIP investments and those whose tenure was completed rose marginally to 7.76 lakh from 7.24 lakh.


“With a vaccine coming in (for Covid-19), confidence is slowly coming back. Due to the market rise, past returns of equity mutual funds are good which is attracting investors,” said A Balasubramanian, chief executive of Aditya Birla Sun Life Mutual Fund. He is seeing interest among investors to start SIPs in asset allocation funds, mid- and small-cap funds and some thematic plans like banking, healthcare and digital.

Wealth managers said with the Nifty50 rising by 90% since its March 23 low, many wealthy individuals are sceptical about high valuations and continue to book profits in their equity portfolios.
Rising SIP Collections, Folios Point to Retail Comeback in Equities
However, some retail investors — especially those who stopped the SIP to collect money for an emergency or those who could not continue due to loss of income — are slowly coming back. Some are returning to funds with high past returns, like international funds, while some are buying into value themes.
“Retail investors are keen to start SIPs in international funds, as past performance has been good and it is missing in many of their portfolios,” said Credo Capital founder S Shankar.
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With other avenues for investments like bank deposits yielding returns of less than 5% and gold already up 25% over last year, many are coming back to equities.

“Fixed deposit rates have moved down in the last year, making it unattractive. This is bringing many investors back to equities again as cash flows improve and confidence is back. Those who have some lump sum are staggering a small part over the next six months,” said Anup Bhaiya, managing director of Money Honey Financial Services.
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