Indians Chanting the “SIP” Mantra for Long-term Wealth Creation

Vatsal Jain
2 min readAug 31, 2023

Systemic Investment Plans (SIP) in India have hit a record high!

Image Credit: Freepik

The monthly flow in mutual funds (MF) via the SIP route clocked ₹𝟭𝟱,𝟮𝟰𝟰.𝟳𝟯 𝗰𝗿 𝗶𝗻 𝗝𝘂𝗹𝘆 𝟮𝟬𝟮𝟯, crossing the 15,000-cr mark for the first time.

That’s pretty much more than June (₹14,734 cr) and May (₹14,749 cr) numbers.

In recent years, India’s MF industry has gained considerable momentum for good reasons.
💸Easy-to-understand schemes
💸Small investment amounts
💸 Straightforward investment via numerous mediums — banks, agents, and online (websites and apps)

No doubt, the rise in retail investors’ interest in MFs has materialized into incredible inflows across scheme categories.

Additionally, July 2023 saw 𝟯𝟯 𝗹𝗮𝗸𝗵 𝗻𝗲𝘄 𝗦𝗜𝗣 𝗮𝗰𝗰𝗼𝘂𝗻𝘁𝘀 registered, taking the cumulative number to 𝟲.𝟴 𝗰𝗿, again an all-time high.

What grabs equal attention is that monthly SIP contributions have stayed above ₹13,000 cr since October 2022.

Despite these phenomenal numbers, inflows into equity MFs slipped to ₹7,626 cr in July 2023 from ₹8,637 cr in the preceding month. That’s an 11.7% month-on-month (M-o-M) decline.

This drop in net inflow is primarily due to profit-booking from some investors, especially in large-cap funds, as Indian bourses trade near record-high levels. The fund category saw net withdrawals of ₹1,880 cr.

Nevertheless, net inflows into mid and small-cap funds remained strong, with the latter at ₹4,171 cr.

Investors are increasingly realizing that MFs offer multiple options — from debt to high-risk equity — suiting their risk appetites and financial goals. What’s more, they can contribute to India’s growth story by investing as little as ₹500/month.

17 open-ended MF schemes were launched in the month under review, raising ₹6,723 cr.

All these inflows pushed SIP assets under management (AUM) to ₹𝟴.𝟯𝟮 𝗧𝗻 in July 2023 against ₹7.93 Tn in the previous month.

MF houses and financial institutions are also walking extra miles to educate investors about the benefits of SIPs, underscoring the power of compounding to achieve financial goals over the long term.