Investors keep faith in SIP despite market weakness in April

Investors continued to pump money through the route of systematic investment plan (SIP) in April despite nearly 9% drop in the benchmark indices till the month end from their peaks. The assets under management (AUM) of the SIP linked funds reached a record Rs 5.8 lakh crore in April, the data from the Association of Mutual Funds in India (AMFI) show. The share of SIP linked AUM in the total mutual funds AUM was 15.2% compared with the long-term average of 11%.

The expansion in SIP AUM was led by continued buoyancy in the SIP monthly inflow. It remained more than Rs 10,000 crore for the eight-month row taking the total cumulative inflow in the past 12 months to Rs 1.3 lakh crore. This partially offset the impact of heavy selling by the foreign portfolio investors (FPIs), which pulled out about Rs 1.49 lakh crore during the period.

In April, 11.3 lakh new SIP accounts were opened taking the total tally to 5.4 crore. The SIP stoppage ratio, which is derived by dividing the number of closed SIP accounts into new accounts opened remained at 0.48, which was below the long-term average. The average ticket size of the SIP account fell by 21% to Rs 2200 during the month compared with the long-term average level.