SIP Inflow Slip: Investors Not Prepared To See 20% Correction, Says Advisors

According to the Association of Mutual Funds India, the number of new SIPs started for the month under review stood at 44,56,000.

According to the Association of Mutual Funds India, the number of new SIPs started for the month under review stood at 44,56,000 (Image source: Envato)

When it comes to systematic investment plans, the saying that 'time in the market beats timing the markets' explains the system and logic the best. The inflows into mutual funds had been on an impressive growth streak, with more investors choosing this route on a monthly basis.

Starting from June 2023, the inflows via SIPs had only increased even if the uptick was marginal. This monthly growth streak into SIPs was only snapped back in November 2024. Following a Rs 25,320 crore inflow in November, the inflow went back up to a record high in December 2024.

Also Read: SIP Jitters? Edelweiss' Radhika Gupta Bats For Long Haul

The SIP contribution stood marginally lower at Rs 25,999 crore in February, compared to the inflow in January 2025. According to the Association of Mutual Funds India, the number of new SIPs started for the month under review stood at 44,56,000.

The asset under management held by mutual funds coming in via the SIP route stood at Rs 12.38 lakh crore. To put this inflow in perspective, the funds from SIPs account for about 19.2% of the mutual fund industry assets.

For the month under preview, the number of SIP accounts that were discontinued stood at 55 lakh. According to AMFI, an account is considered discontinued if three consecutive weekly, fortnightly or monthly SIP payments are missed.

A new data point provided by the association this month was the number of SIP accounts contributing to the inflow. Which means the number of accounts that actively contribute to the inflow stands at about 8.26 crore accounts.

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Also Read: Equity Mutual Funds' Inflows Drop 26% In February As SIPs Slip

Making Sense Of The Slip

"Lot of investors who have come into the markets in the last five years have only seen a sustained bull run with minor blips. Many of them are not mentally prepared to see a 20% plus correction in their investments," Vinit Iyer, managing director of Prudeno Wealth Advisors, said.

⁠In the last year, SIPs have turned negative mostly in mid and small cap funds and investors aren’t able to understand the benefit of downside averaging, he added.

"Investor participation in equities remains resilient despite recent market volatility. Investors are displaying a more mature approach, choosing to embrace volatility rather than opting for a 'sell and go away' mindset. Some are even strategically using market fluctuations to their advantage," said Santosh Joseph, founder of Germinate Investment Services.

It’s important to note that these numbers are coming off peak flows observed between September and December 2024. While there is a decline from those highs, the figures remain strong and robust when compared to the same period last year, according to Joseph.

Markets naturally go through cycles, and expecting peak flows consistently is unrealistic, he said. In the current environment, where the market has corrected from its highs, these inflows are still extremely valuable and indicative of sustained investor confidence.

Also Read: Mistakes To Avoid During Market Crash: 'Don't Stop SIPs', 'Avoid Leverage', Says Zerodha's Nithin Kamath

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WRITTEN BY
Ann Jacob
Ann Jacob tracks markets with a special focus on personal finance. She clos... more
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