Market rally, steady inflows take AUM via SIPs to record highs of Rs 4.67 lakh crore in May

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At Rs 4.67 lakh crore the asset under management (AUM) via the systematic investment plan (SIP) route hit a record high at the end of May 2021 following capital appreciation, sustained stock market rally and steady inflows. With benchmark index, Nifty 50 rallying 63% between May 2020 to May 2021 equity SIPs have managed to deliver over 25% returns during the same period.

The mutual fund industry saw an overall AUM increase of 2.1% MoM (Month over Month) to Rs 33.1 lakh crore in May 2021, primarily led by an increase in AUM of equity funds, other ETF funds, and balanced funds.

“Equity AUM (incl. ELSS and index funds) of domestic MFs increased 7.7% MoM to Rs 11.1 lakh crore in May 2021. This was on account of a rise in market indices (Nifty up 6.5% MoM) and an increase in equity scheme sales (up 15% MoM to Rs 27,700 crore). Furthermore, redemptions decreased 18.6% MoM to Rs 17,200 crore. This led to an increase in net inflows to Rs 10,500 crore in May 2021 – the highest in past 14 months,” noted Fund Folio report by Motilal Oswal.

SIPs contribution hit lifetime highs

Apart from buoyant market conditions SIP contribution has been rising as according to data released by the Association of Mutual Funds in India (AMFI) the contributions under the systematic investment plan (SIP) touched their lifetime highs of Rs 8,818.90 crore in May 2021 versus Rs 8,596.25 crore witnessed in April 2021. The March 2021 SIP contribution of Rs 9,182 crore which was higher owing to the weekend dawning at the end of February the rollover of Rs 495-500 crore of February is reflected in March 2021.

“Low-interest rates are driving money into asset classes that beat inflation. Given the current trend as well as the levels of the market, there is a prudent investing strategy by way of SIP in order to average the price of investing,” explained Priti Rathi Gupta, Founder, LXME and MD of Anand Rathi.

SIP flows over the years

SIP inflow over the past years has more than doubled from Rs 43,921 crore in FY2017 to Rs 96,080 crore in FY2021. In the first two months of FY 2022 SIP inflows stood at Rs 17,415 crore if we annualize this number works out to Rs 1,04,490 crore.

In a bullish month of May 2021, while the Nifty rally played its part, more than 8.50 lakh folios also got added. The big opportunity of expanding mutual fund AUM must begin with SIPs. The litmus test will be whether SIPs can now sustain above Rs10,000 crore per month on a sustained basis.