New accounts opened via SIPs slacken in June, discontinuity increases

New accounts opened by systematic investment plan (SIP) investors moderated in June as 12-month rolling returns turned negative for the first time in two years. Even the discontinuity in SIPs rose.
 

New SIP registration stood at 1.79 million, compared with nearly 2 million seen in May, reveals the data by the Association of Mutual Funds in India (Amfi).
 

Since June 2021, new SIP registration has always been upwards of 2 million each month.
 

“This is the cautiousness which has come to the SIP account holder. In the past three months, the market was highly volatile, showing some downward trend. Unsurprisingly, SIP investors turned careful. We would suggest SIP investors not to time the market and continue to focus on goal-based investment,” says N S Venkatesh, chief executive, Amfi.
 

SIPs discontinued or whose tenure got over also rose to 1.14 million — the highest since January. 

In the past few months, Indian equities have been highly volatile due to worries over rising inflation, higher crude oil prices, and sustained selling by foreign portfolio investors (FPIs).
 

Last month, the S&P BSE Sensex Index shed around 4.6 per cent, while the S&P BSE MidCap and the S&P BSE SmallCap indices were down 6.18 per cent and 6.01 per cent, respectively. All three indices fell to their lowest levels in three months during the month, leading to one-year rolling returns turning negative.

Experts say recent returns are a huge factor impacting incremental inflows into the market.

Despite slackening SIP account openings, inflows via SIPs have continued to remain robust. The inflows through SIPs stood at Rs 12,276 crore in June — slightly lower than Rs 12,286 crore in May.
 

The number of SIP accounts hit a new record of 55.4 million in June, compared with 54.8 million. Its assets under management was at Rs 5.51 trillion at the end of June.
 

Sustained positive flows via the SIP route have supported the overall equity inflow tally, helping offset the selling by FPIs.
 

In June, equity funds saw net inflows of Rs 15,498 crore. During the first quarter of 2022-23, equity funds have seen net inflows of nearly Rs 50,000 crore.
 

Industry players say if markets remain unstable for the next few months, equity funds will feel the impact and might see flows turning sluggish.