SIP Investments surge to record Rs 1.66 trillion in 2023, boosted by lower ticket sizes

Investors are showing robust confidence in systematic investment plans (SIPs), propelling inflows to an impressive ₹1.66 trillion during the initial 11 months of 2023. The Securities and Exchange Board of India's (SEBI) recent decision to reduce the minimum investment to ₹250 is expected to further stimulate investment.

The cumulative investment in SIPs for the first 11 months of this year significantly surpasses the entire amounts for 2022 (₹1.5 trillion), 2021 (₹1.14 trillion), and 2020 (₹97,000 crore), according to data from the Association of Mutual Funds in India (AMFI).

Akhil Chaturvedi, Chief Business Officer of Motilal Oswal AMC, anticipates sustained year-on-year growth in SIP participation. He notes, "With a positive economic outlook and increased market engagement, investors are likely to continue favoring SIPs as a disciplined and accessible investment avenue. The ongoing market strength, coupled with the potential for healthy returns, reinforces our belief in the continued upward trend in SIPs throughout 2024."

In the current year, SIP inflows into mutual fund schemes have reached ₹1.66 trillion by November, as reported by industry data. The surge in inflows is attributed to factors such as heightened awareness campaigns by AMFI, demographic trends, attractive returns on equity investments, and the ease of investment.

Chaturvedi emphasized the role of AMFI in raising awareness about SIP and equity investing, adding, "Demographics play a pivotal role in this surge. Also, a structural change in how people in India perceive and approach equity as an asset class has also helped."

SIP, a mutual fund investment strategy, enables individuals to invest a fixed amount periodically in a chosen scheme. The current SIP installment amount can be as low as ₹500 per month. SEBI's recent initiative to make ₹250 SIPs viable is expected to enhance financial inclusion and increase participation in the Indian capital market.

A Balasubramanian, Managing Director, and CEO of Aditya Birla Sun Life AMC, believes that smaller ticket-sized SIPs will broaden investment opportunities for the lower-income population. This aligns with SEBI's efforts to encourage financial inclusion.

The consistent growth in SIP investments is evident, with SIP Assets Under Management (AUM) surging 38% to ₹9.31 trillion at the end of November 2023 from ₹6.75 trillion at the end of December 2022. Currently, mutual funds boast approximately 7.44 crore SIP accounts.

The mutual fund industry, with 42 key players, heavily relies on SIPs for inflows. Equity mutual funds, in particular, attracted ₹1.44 trillion in investments during the current year (up to November). The sustained monthly increase in SIP flows has propelled the industry's AUM to ₹49 trillion by November-end, up from ₹40 trillion at the end of December 2022.

(With input from PTI)