MUMBAI: Fund inflows into the red-hot SIPs scaled new highs in May with the monthly addition touching Rs 26,688 crore, or by 0.21% on-month, taking the segmental AUM to Rs 14.61 trillion from Rs 13.90 trillion in April when the inflows were Rs 26,632 crore.
At Rs 14.61 trillion of AUM, the systematic investment plans or SIPs’ share in the overall industry AUM of Rs 72.20 trillion (up from Rs 69.99 trillion in April), is 20.24%, up from 19.9% in April, the industry lobby Amfi told reporters Tuesday.
SIP inflows crossed the Rs 26,000 crore milestone in December 2024 when it had touched Rs 26,459 crore and fell below the mark in February (Rs 25,999 crore) and March (Rs 25,926 crore) but continued to scale back to reach Rs 26,632 crore in April and further up to Rs 26,688 crore in the reporting month of May.
The marginal growth in SIPs comes despite a drop in inflows into the equity category, Amfi said.
Further, the number of contributing SIP accounts rose to 8.56 crore from 8.38 crore in the previous month, while the overall mutual fund folios rose 2.1% to 23.83 month-on-month basis and 16.5% surge on-year.
"The underlying trend remains robust. Strong SIP inflows, which we have witnessed in recent times, can be expected to continue, reflecting investors long-term commitment to equities,” Himanshu Srivastava, an associate director at Morningstar India, said.
He attributed the moderation in monthly flows into equity funds to more cyclical than structural, and with macroeconomic indicators largely supportive, flows into equity funds could regain momentum in the coming months.
The higher inflows is partly due to the fact that the industry saw a lower SIP stoppage ratio after months. According to Amfi, 59 lakh accounts were opened in May, while 43 lakh SIP accounts were either stopped or matured in the month. Total SIP accounts now stand at 9.06 crore in May.
Meanwhile, net inflows into open-ended funds fell 21.66% to a one-year low of Rs 19,013.12 crore in May. Yet the overall net assets under management of the industry rose to Rs 72.20 trillion from Rs 69.99 trillion in April. Overall, the industry saw a net inflow of Rs 29,108.33 crore in May.
In May, the Sensex rose 1.51% while the Nifty jumped 1.71%.
Excluding May, net inflows into open-ended equity funds have stayed in the positive zone for the 51st month in a row, starting from March 2021.
On the industry AUM crossing the Rs 72-trillion mark, the Amfi chief executive N Chalasani said the industry reaching the new highs was driven by resilient retail participation and consistent SIP inflows.
“Growth of SIPs is particularly encouraging, indicating a shift towards disciplined, long-term investment. Equity inflows moderated to Rs 19,013 crore in the reporting month, reflecting cautious investor sentiment amidst market volatility. Such phases often witness a natural reallocation towards hybrid and arbitrage schemes, offering a more balanced approach during uncertain times," said Chalasani.
"The broader slowdown in equity inflows can be attributed to a mix of factors: a less buoyant equity market in May compared to April, concerns around global economic headwinds, and a possible consolidation phase or profit booking in the domestic equities following sharp rallies in the previous months and stretched valuations. Also, heightened global volatility, stemming from geopolitical tensions the country had with Pakistan in the first week of the month, and concerns around global inflation, contributed to a risk-off sentiment among some investors," Srivastava of Morningstar said.
In the equity segment, inflows into the largecap funds crashed 53.19% to Rs 1,250.47 crore, small-caps also saw tapering of demand. Net inflows into smallcap funds slumped 19.64% to Rs 3,214.21 crore, while mid-cap funds inflows were down 15.25% to Rs 2,808.68 crore in May.
Multicap and flexicap funds, which invest across largecap, midcap and smallcap stocks, saw divergent trends. Inflows into multicap funds which have to invest at least 25 percent each in largecaps, midcap and smallcap stocks rose 17.54% Rs 2,999.29 crore. On the other hand, flexicap funds, which have no restrictions on investments across different market capitalizations, dipped 30.68% to Rs 3,841.32 crore.
In the fixed income category, liquid funds saw net outflows of Rs 40,205.36 crore, while overnight funds saw net selling of Rs 8,120.03 crore and corporate bond funds saw net buying of Rs 11,983.35 crore, while money market funds saw net inflows of Rs 11,223.08 crore and gold exchange-traded funds got net inflow of Rs 291.91 crore, marking an improvement from the marginal outflow of Rs 5.82 crore in April.
Overall, investors appear to be making balanced and thoughtful allocation decisions across asset classes, aligned with their risk appetite and investment horizons,” according to Suranjana Borthakur of Mirae Asset Investment Managers.
According to Sanjay Agarwal, a senior director with Care Ratings, “the overall industry assets under management rose 3.14% on-month to cross Rs 72.2 trillion mark buoyed by mark-to-market gains and continuous inflows into equity funds for the last 51st month.
“The outflow in debt funds, particularly from liquid funds and overnight funds was likely a result of a combination of factors, including seasonal tax related withdrawals, portfolio rebalancing and interest rate cut expectations. Despite this drawdown, overall open-ended debt funds AUM stood at Rs 17.54 trillion, roughly at similar levels when compared to April.”
Ashwini Kumar, senior vice-president at Icra Analytics said while every month inflows into equity funds dipped nearly 22%, on an annualised basis, the fall is much steeper at 45.2% when the AUM was Rs 34,697 crore. This was mainly due to the persistent concerns over India-US trade tension.