Eight of 10 net SIP investments go into active equity schemes: Report

An analysis of systematic investment plan (SIP) data shows that over 80 percent of the net SIP inflows went to active equity schemes in September, a report by Business Standard stated. Meanwhile, the report added that only 6 percent of net SIP inflows went into passive schemes and 8 percent into hybrid schemes.

According to BS, the Hybrid and passive funds gained a lot of traction in the past two years owing to their advantages vis-a-vis active equity schemes, but are yet to emerge as competition to active equity funds when it comes to systematic investing.

Meanwhile, debt schemes accounted for only 2 percent of the net SIP inflows in September, noted the report.

According to BS, investment advisors recommend the SIP route for investment in volatile asset classes to maximise the benefit of rupee cost averaging, hence, equity schemes are the most preferred option for SIP investment. Investors generally use debt and hybrid schemes to park lump sum amounts during periods of equity market downturn, they added.

BS informed that the assets under management (AUM) of passive schemes has jumped 88 percent between March 2021 and September 2022, whereas Hybrid funds have posted a 44 percent growth during the same period.

Data from AMFI shows that gross SIP inflows in active equity schemes, as well as other schemes (debt, hybrid and passive), have surged this financial year, it noted.

The gross inflows in equity schemes have risen 6 percent in FY 2023 so far to ₹10,956 crore in September from ₹10,365 in March while, the rise in gross SIP inflows is only 3 percent for the rest of the open-ended schemes, said the report.

However, net inflows haven't gone up in tandem with the gross flows. Net inflows in active equity schemes, which came in at ₹5,672 crore in April, rose to ₹7,360 crore in June and has since declined every month to ₹5,325 crore in September, the report pointed out.

According to MF executives and top distributors, lower net SIP inflows are a result of higher redemptions on account of upcoming festivities. Investors often wait for the festive season to make big-ticket purchases like a house, car or jewellery.