Inflows into mutual fund systematic investment plans (SIPs) hit an all-time high of ₹21,262.22 crore in June 2024, according to the data released on Tuesday by the Association of Mutual Funds in India (AMFI).
Inflows into SIPs have been rising continuously for the past 12 months. As the table below shows, inflows spiked from ₹18,838 crore in January 2024 to ₹21,262 crore, an increase of 12.8 per cent in six months.
If one compares the latest figure with the corresponding data from one year ago, one realises that these regular inflows have increased 44 per cent from ₹14,734 crore in June last year to ₹21,262 crore in the previous month.
One might wonder how SIPs have become so popular among retail investors. Wealth advisors argue that the phenomenon is the result of long-term awareness campaigns and investor education carried out by industry players.
“Investing via SIPs enables the investor to make the most of rupee cost averaging. So, when the market is volatile or going through a bull phase, it is advisable to invest in a staggered manner. This can prevent you from entering the market at a high valuation,” says Sridharan Sundaram, founder of Wealth Ladder Direct.
“Since retail investors are not expected to know what is the right time to enter the markets, the highly recommended route is to invest in small doses i.e., SIPs. This has caught up retail investors, and rightly so,” says Deepak Aggarwal, a Delhi-based chartered accountant and financial advisor.
Preeti Zende, a Sebi-registered financial advisor and founder of Apna Dhan Financial Services, echoes the same sentiments.
“A systematic investment plan is a great tool to invest in a staggered manner, allowing investors to invest small amounts periodically i.e. weekly, monthly or quarterly. Investors understand that mutual funds offer risk management better than direct equity. They also know that SIP provides the benefit of Rupee Cost Averaging,” says Zende.
Thanks to the favourable overall macro-economic factors, investors are keen to continue their SIPs and those who never invested in mutual funds have now started their investment journey,” she adds.
“The mutual fund industry has demonstrated remarkable growth, becoming a cornerstone of financial stability and wealth creation for crores of investors. The industry continued to benefit from sustained flows into equity-oriented mutual funds, hybrid funds and passive funds,” says Venkat Chalasani, Chief Executive of AMFI.