For the First Time Ever, Annual SIP Inflows Cross the INR 1 Lakh-Crore Mark

The Association of Mutual Funds in India (AMFI) reports that total inflows from systematic investment plans (SIPs) have surpassed Rs 1 lakh crore (US$ 13 billion) for the first time in a year.

Domestic flows have somewhat offset the selling pressure from international portfolio investors, thanks to ongoing support from retail investors (FPIs). In 2019, the previous highest SIP flow in a calendar year was Rs 98,612 crore (US$ 12.99 billion).

Domestic funds invested Rs 63,439 crore (US$ 8.35 billion) in the equity market in the first eleven months of 2021, boosted by SIP inflows, while FPIs invested close to Rs 43,193 crores (US$ 5.69 billion). According to NSDL data, the share of local funds in total institutional equity AUM increased to 16.8% in November, the highest since February 2020.

Each of the seven months leading up to November saw an increase in the monthly SIP book. The monthly flow has remained above Rs 10,000 crore (US$ 1.31 billion) for the past three months. As a result, the monthly SIP book size in 2021 averaged Rs 9,337 crore (US$ 1.23 billion), compared to a long-term average of Rs 7,028 crore (US$ 0.93 billion).

The high returns of SIP plans, as well as the lack of other investment options, are the primary reasons for retail investors’ unwavering enthusiasm. The three-year and five-year SIP returns based on investment, Sensex stocks were at a 12-year high of 26.3% and 19.4%, respectively, which was a 12-year high.

In November, equity assets under management (AUM) rose by 25% on a two-year compounded annual rate to Rs 17.43 lakh crore (US$ 229.7 billion). The overall number of equity fund folios reached 7.8 crore (78 million) of which 20% were added in the current year.

Individuals accounted for 54.9% of total mutual fund assets in October 2021, up from 51.7% a year earlier, according to AMFI data.