SIP AUM share reaches record high in March amid sustained inflow

ET Intelligence group: The share of mutual funds linked to the systematic investment plans (SIP) in the total mutual fund asset under management (AUM) touched a record 17.3% in March 2023, according to the data from the Association of Mutual Funds in India (AMFI). It was 200 basis points higher than the year-ago level.

The SIP AUM share has been consistently expanding since the past few years thanks to consistent inflow of funds. The long-term average share of SIP schemes in the total MF AUM is 11.8%.

In the past five years, the AUM of SIP linked funds grew annually by 26% to reach Rs 6.8 lakh crore at the end of March 2023 while the overall MF investments expanded by 11%. In FY23, the SIP schemes received record investments worth Rs 1.6 lakh crore compared with the inflow of Rs 1.24 lakh crore in the previous year. The monthly SIP book reached a record Rs 14,279 crore in March 2023 gaining 4.3% month-on-month.

Higher SIP inflow despite sluggish stock market return over the past 12 months implies that investors are preferring a longer investment horizon. Nearly half of the SIP AUM has an investment period of more than three years and half of that has a five-year duration.

Although the SIP inflow remains encouraging, net account addition has been moderating amid elevated stoppage ratio. In FY23, net SPI account addition fell to 1.1 crore compared with an addition of 1.6 crore in the prior year. Higher monthly inflow and moderation in account addition has resulted in improved SIP ticket size. The average ticket size swelled to Rs 2,244 in March 2023, the highest in a year.