SIPs Hold Strong for Equity Gross & Net Sales

“To begin, let me applaud the huge efforts of all our Mutual Fund Distributor friends for a commendable effort in promoting SIPs as a wonderful tool for their clients to participate in Indian Equity Markets, India Growth Story, their Long-Term Financial Planning linked to Goal setting”.

Further, the Investors need a special appreciation for continuing their faith in SIPs as an ideal way to create long term wealth. We definitely need many more such unique Smart Investors to increase the Base & Value of Investments by Multifold. Currently, the Unique PAN Investors are only 3.77 Crore & PAN Card issued are at 61 Cr.

The proportion of Equity oriented schemes is over 51% in overall Assets Under Management & Individual Investors are now holding over 57% of overall Assets Under Management. Equity Oriented Schemes derive almost 90% of their Assets from Individual Investors, with over 80% of the Individual Investor’s Assets invested in Equity Funds, with average ticket size of around INR 1.60 Lac in Equity Schemes.

Around 23% of Individual Investor’s Asset are Direct (across all category of schemes), hence 77% is driven through Mutual Funds Distributors.

You will be surprised to know that only 19% of Individual Investors invest in Equity Funds Directly, hence 81% is through Mutual Fund Distributors The percentage of Retail investors (defined as single investment value of < INR 2 Lacs) investing directly across all mutual fund products is around 19%, the number is 25% for HNI Investors (defined as single investment value >= INR 2 Lacs).

Around 23% of the overall Equity Investments is Direct Investment, of which over 70% is invested by Corporate/Institutional Investors, investing directly.

Now having given the above quick inputs, the Graph shown covers data point for Financial Year 2022-23, covering 12 Months Data for:

BSE 500

Indian Consumer Price Inflation

Dollar Index (DXY), an important parameter of US currency strength with Global Major Currencies, it factors in multiple important inputs on Global Financial situation, its reaction & decision output.

Mutual Fund Equity Gross Inflows

Mutual Fund Equity Net Inflows

& Finally, Mutual Fund Equity Gross Sales adjusted (reduced) for SIP Inflows!

The Graph with above data points provides the percentage change Month on Month.

Now, irrespective of Global & Domestic issues due to multiple factors like: Rising Inflation, Central Banks increasing Interest Rates, Geo Political issues, Oil Price fluctuations, Equity markets being extremely volatile across, Global GDP growth in question, certain Global Economies approaching a recessionary situation etc, “The SIP inflows have been rising consistently” with 12 month average flow as INR 12,998 Crore per month for FY 2022-23, from a 12 month average flow as INR 10,380 Crore per month in FY 2021-22, an increase of 25.21 Percent in 12 month average flow per month! Over 95% of SIPs are in Equity oriented schemes.

Equity Gross Sales (Lumpsum & SIP Inflows) as Month on Month percentage change has *averaged 0.28 Percent, with 12 month average flow as INR 30,167 Crore per month, further Equity Net Sales as Month on Month percentage change has *averaged 21.20 Percent with 12 month average flow as INR 12,229 Crore per month (inclusive of SIPs). (*Average is of month on month percent change)

If you were to Adjust the Equity Gross Sales month on month by reducing the SIP monthly inflows in order to adjust the “Bumpy Volatile Lumpsum” Equity inflow impact for month on month, the *average is 2.10 Percent with 12 month average flow as INR 17,169 Crore per month! (*Average is of month on month percent change)

The low average of 2.10 Percent (higher the average, better it is) implies that Equity Monthly Gross Sales for Lumpsum have been very Bumpy & Equity Monthly Redemptions have been hitting hard on Equity Gross Sales, with some months showing a whopping reduction in Gross Sale & a few with high Gross Sales & Redemptions showing similar trends too, impacting the net effect on Equity Sales!

Had it not been for the consistent increase in SIPs Inflow month on month, picture would have been very different. A similar trend must be built through Systematic Transfer Plans as well, concepts are just the same.

“The Fact, SIPs flows Hold Strong for Equity Gross & Net Sales numbers, we certainly need to increase the “Average Inflow Rate”, it will be primarily driven by a Multifold increase in New (unique) PAN Investors, a Robust growth in our Distribution Network through Mutual Fund Distributors, with enormous growth in SIP inflows & a stable participation through Lumpsum Equity investments. I am highly positive that this Growth Story will be Driven Strongly Only by Our Mutual Fund Distribution Partner Friends!”