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The Association of Mutual Funds of India (Amfi) is scheduled to release its monthly data for June 2021 today, which will provide insights about investment inflows and volume across mutual fund categories. The latest data comes at the time when domestic equity markets are witnessing high bouts of buying, particularly in the midcap and smallcap space. Also, with a slowing down of the second wave of the Covid-19 pandemic, many states eased the mobility and other curbs, which in return boosted the economic activity and investor’ sentiment.

Just two days back, Amfi had also reclassified companies across its large cap and midcap categories, taking some PSUs into the former. READ HERE

May 2021 – when the second wave of Covid-19 infections was at its peak – witnessed a meteoric rise in retail participation via SIP route, a trend which may be seen continuing in June also. This increasing affinity to the MFs can be attributed to the declining bank interest rates and the realisation that they are the best asset class for inflation adjusted long-term returns. SIPs allow individuals to invest as small as Rs 500 per month (even Rs 100 in some cases) and leverage the benefit of compounding. Rupee-cost averaging is another benefit that makes SIPs attractive.

Here’s a look at trends from May 2021:

SIP asset base touched all-time high

Over the past five years, the systematic investment plan or SIP AUM has grown 30 per cent annually, twice as fast as the growth in the overall mutual fund industry’s assets under management (AUM). According to Amfi, SIP AUMs saw a nearly four-fold jump to Rs 4,67,366 crore as of May this year from Rs 1,25,394 crore as of August 2016.

Annual SIP contribution jumped two-fold

The annual mutual fund SIP contribution too has seen a more than two-fold rise during the past five years to Rs 96,080 crore in 2020-21, from Rs 43,921 crore during 2016-17. Also, monthly SIP contribution has witnessed a healthy growth of 2.52 times to Rs 8,819 crore as of May 2021, compared to Rs 3,497 crore in August 2016.

Rising retail participation

In the ongoing fiscal alone, for the first five months, SIPs have contributed Rs 42,148 crore.
Retail Investor interest towards mutual fund (MF) asset class has seen a meteoric rise as SIP accounts during the last five-year jumped almost four times to 3.88 crore in May 2021, from 1 crore as of April 2016.

SIP registrations rise sequentially

The number of new SIPs registered on a month-on-month basis has seen an almost three-fold jump to 15.48 lakh as of May 31, 2021, from 5.88 lakh in April 2016.