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New mutual fund SIPs touch 3-year high in March

New mutual fund SIPs touch 3-year high in March

11 Apr 2021

It is money that begets money — so the saying goes.

That helps explain the average saver’s approach to stocks: Buy into them when their trailing returns outdo other asset classes. Monthly SIP folios typically tend to rise in number when stocks do well. For the past nine months, that link seemed severed, but the familiar trend is now back — with a bang.

The monthly net addition of SIP accounts rose to a three-year high of 9.62 lakh in March, data from the AMFI showed. March SIP account net addition is nearly double the last five-year average of 4.52 lakh. The highest net SIP account addition in a single month was 9.68 lakh — in January 2018.

Gross additions at 16.71 lakh accounts are the highest since AMFI kept records of this data set. So the ratio of the new SIP accounts opened to those closed climbed to 2.36 in March — the highest ratio since May 2018. This ratio averaged 1.55 in the last year.

Average SIP investments per account rebounded to ₹2,464 in March, compared with ₹2,074 in February, which was the lowest level in the five years. The cumulative impact of more SIP accounts and allocations ensured the SIP book expand to a record ₹9,182 crore in March — 6% higher than the previous high of ₹8,641 crore in March 2020.

According to industry estimates, nearly 90% of the SIPs are linked to equity funds, which is around one-third of the total industry AUM.

The sales head at a leading domestic AMC said that attractive trailing returns and the absence of major corrections in the past few months have instilled confidence among investors to allocate money through SIPs. The lack of alternative investment options also helped.

New MF SIPs Touch 3-Yr High in March