Mutual Funds add 77 million SIP accounts in H1 to get back on high-growth track
- IBEF
- October 17, 2023
After a brief pause mutual funds (MFs) are once again adding new systematic investment plan (SIP) investors at an all-time high rate, which was witnessed during FY22.
In comparison to the same period last year (FY23), MFs added a net 77 million SIP accounts during H1 FY24. The net additions this year are slightly greater than the additions in H1 of FY22, which totaled 76.5 million.
The increase in momentum is the result of MF schemes performing better on the returns chart, which is supported by the market's fast recovery from this year's lows in March.
The NSE Nifty 50 index increased by nearly 13% in H1 FY24, while the Nifty Midcap 100 and Nifty Smallcap 100 increased by 35% and 42%, respectively.
According to data from Value Research, as of October 13, 2023, approximately 97% of equity plans had produced double-digit returns over the previous year.
Mr. Vishal Kapoor, CEO, Bandhan Asset Management Company (AMC) mentioned “The growth in the net SIP addition reflects renewed investor confidence driven by robust fund performance and sustained efforts in financial literacy by fund houses. While new investors are using SIPs as a disciplined approach to build their corpus, we also saw existing investors renewing their SIPs and starting fresh ones based on their positive past experiences”.
Mr. Saugata Chatterjee, chief business officer, Nippon India MF said “The touch points for selling SIPs have been growing consistently. The industry is consistently adding new MF distributors, be it individuals or bank branches or digital platforms. There has been a surge in SIPs coming from new investors. Around 40% of the new SIP registrations are from new investors. In the previous financial year, the figure was lower at around 25%”.
2.3 million new investors joined the sector in H1 FY24 compared to 1.7 million in H2 FY23. Smallcap schemes have drawn the most investor interest out of all the categories. During this time, the category had an increase of almost 3.7 million folios, compared to just 74,400 for largecap funds. There are others in the industry who think there is room for far faster growth.
“We still have very low stock market investor penetration. Given our growth expectations, SIPs are not growing fast enough. We should be aiming at SIP book growing at 3-5x GDP growth rate for the foreseeable future,” stated Gaurav Rastogi, founder & CEO, Kuvera.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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