SIP additions at a six-month high amid rising churn

ET Intelligence Group: Even as net additions to systematic investment planning (SIP) accounts touched a six month high in August, the year-on-year rate of increase remained volatile amid a higher pace of SIP discontinuations. The number of discontinued SIPs, though lower than fresh additions, rose at a faster rate for the fourth consecutive month in August, according to the data from Association of Mutual Funds in India (AMFI). Discontinued SIPs rose 31% year-on-year compared with a 20% increase in new SIP registrations. As many as 53.8 lakh SIPs were either discontinued or matured in August, against 66.4 lakh new SIP registrations. In the first five months of the current fiscal, a total of 2.9 crore new SIPs were registered, while 2.6 crore SIPs were discontinued or matured.

The growth in contributing SIP accounts has also moderated, suggesting that rising discontinuations are beginning to offset a part of fresh additions. Contributing SIP accounts do not include folios that paused investments for the month. After declining marginally by 85,000 in May, contributing SIP accounts increased by 14.2 lakh in June, but the incremental addition fell to 11.9 lakh in July and further to 11.6 lakh in August. Contributing accounts reached 10 crore in August, up from 9.9 crore in July.

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Monthly net SIP account additions have increased since May after falling by nearly 58,000 in April. Net additions rose to 12.6 lakh in August from 11.1 lakh in July, 4.9 lakh in June and 2.5 lakh in May.

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Net SIP inflow rose 21% year-on-year to ₹32,297 crore in August. SIP inflow has remained in the ₹31,000-32,000 crore range in FY27 so far. Total SIP inflow reached ₹1.6 lakh crore during April-August, implying a year-on-year increase of 15%.