Even as the gross inflows through the systematic investment plan (SIP) route surged 28 per cent in the financial year (FY) 2024, the net SIP inflows grew by a modest 4.9 per cent owing to a sharp jump in redemptions. Mutual Funds (MFs) raked in Rs 87,971 crore net SIP inflows in FY24 compared to Rs 83,873 crore in FY23.
During the year, gross inflows rose 28 per cent from Rs 1.6 trillion to Rs 2 trillion, while redemptions from SIP accounts went up 54 per cent from Rs 72,100 crore to Rs 1.1 trillion, shows data from the Association of Mutual Funds in India (Amfi).
Redemptions from equity schemes were elevated during some phases of FY24 as investors booked profits post an extended run-up in stock prices. Between April 2023 and July 2023, outflows amounted to 80 per cent of the gross inflows in equity schemes.
“SIPs have grown by leaps and bounds in the past few years, largely due to an increase in ease of investment, increased awareness, and the market rally. However, the ease of opening and closing SIP accounts could have led to higher churn as investors move in and out of different schemes. Ideally, investors should stick to their SIPs for the long term but as long as they are committed to investing in MFs through SIPs, especially during market downturns, it’s not much of an issue,” said Mayukh Datta, chief business officer, ITI Mutual Fund.
In a report on Tuesday, the Association of Mutual Funds in India (Amfi) stated that MFs witnessed a record surge in assets under management (AUM) in FY24 owing to strong inflows and mark-to-market gains. The association noted that retail investors—who prefer investing through the SIP route— have played a pivotal role in driving the growth, particularly in equity, hybrid, and solution-oriented schemes, which collectively accounted for nearly 58 per cent of industry assets and 80 per cent of folio count.
“This underscores the increasing participation of households in the capital markets through mutual funds,” it said.
The MF industry added nearly Rs 14 trillion to its AUM in FY24 on account of the sharp rally in equities coupled with strong inflows. The benchmark indices — Nifty 50 and Sensex — surged over 25 per cent in FY24. The broader market Nifty Smallcap 100 and the Nifty Midcap 100 gained by 70 per cent and 60 per cent, respectively.
Equity-oriented active schemes witnessed a substantial growth of 55 per cent during fiscal 2023-24 with the AUM reaching Rs 23.5 trillion. In FY24, the flexicap category emerged as the largest fund category, closely followed by the large cap funds, with multi-cap funds experiencing the highest percentage growth at 85 per cent, Amfi said.
First Published: Apr 17 2024 | 5:38 PM IST