The increase in volatility may not have impacted equity inflows, but it has weighed on new investors coming via the systematic investment plan (SIP) route, reported Business Standard.
In May, 1.97 million new SIPs got registered - nearly 15 per cent lower than the previous five-month average of 2.3 million - reveals the Association of Mutual Funds in India (AMFI) data.
Since June 2021, new SIP registrations have been upwards of 2 million each calendar month. The new SIP tally in May was the lowest in 12 months.
Market participants say a drop in tally could be due to investor fatigue, besides the impact of market fall on investor sentiment.
Over the past few months, stocks have seen wild swings due to concerns over rising inflation, the potential impact of the ongoing war in Ukraine, and a hawkish pivot by the US Federal Reserve.
In the past one year, large-cap funds have posted returns of 4.5 per cent, whereas mid-cap funds and small-cap funds gave returns of 5.4 per cent and 8.14 per cent, respectively.
Market players say the rolling 12-month returns could turn negative for many investors and influence new investor flows.
Until now, the impact on net inflows has been negligible. Inflows through the SIP route have been on an upward trajectory since September 2021. In May, the industry saw inflows of ₹12,286 crore, compared with ₹11,863 crore in April.
In 2021-22, inflows through SIPs stood at ₹1.24 trillion, against ₹96,080 crore seen in 2020-21.
D P Singh, deputy managing director and chief business officer at SBI MF, says, “Investors have continued to stay on, market volatility notwithstanding. We have always said that investors should not move out when markets are down. I think they have now understood the narrative.”
The number of SIPs discontinued or whose tenure completed stood at 1.03 million in May.