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The mutual fund (MF) gross inflows through the systematic investment plan (SIP) route topped the Rs 20,000 crore mark for the first time in a calendar month as investors opened a record 6.4 million SIP accounts despite a spike in market volatility.
The number of accounts opened last month was almost 50 per cent higher than the registrations seen in March.
“India’s MF industry has reached yet another milestone with the SIP book crossing above Rs 20,000 crore in April 2024.
"It shows the MF industry has received higher acceptance from investors to invest their savings and create wealth in the long term via the SIP route,” said A Balasubramanian, managing director and chief executive officer, Aditya Birla Sun Life Asset Management Company (AMC).
The key benchmark indices ended April with nearly a 1.2 per cent gain despite registering a decline on four consecutive sessions ending April 18.
The two indices fell nearly 3.4 per cent during the four sessions.
However, the net inflows into active equity schemes were 16 per cent lower month-on-month at Rs 18,917 crore, largely due to higher redemptions from largecap funds and a decline in collections by new fund offerings.
According to D P Singh, deputy managing director and joint chief executive officer of SBI MF, the decline in net inflows indicates that some investors are opting to book profits and stay on the sidelines ahead of the election results.
“In a high-pitched political environment and market volatility, the smart money moves out.
"This is evident in the surge in redemptions in largecap funds and higher inflows into arbitrage funds,” said Singh.
Overall, the industry garnered inflows of Rs 2.4 trillion as liquid funds alone recorded inflows of Rs 1 trillion.
The strong inflows and mark-to-market gains due to market movement resulted in a 7 per cent jump in the total assets under management (AUM) to Rs 57.3 trillion, shows data released by the Association of Mutual Funds in India (Amfi).
“The MF industry surged to new levels, with net AUM reaching Rs 57.3 trillion and SIP accounts touching 87 million.
"A historic SIP contribution of Rs 20,371 crore taking SIP AUM to Rs 11.3 trillion with 6.36 million new SIP registrations showcases investor confidence,” said Venkat Nageswar Chalasani, chief executive, Amfi.
No impact of KYC issue
The industry continued to witness strong growth momentum even as changes in the know-your-customer (KYC) rules made it difficult for some investors to start new investments.
According to Chalasani, the KYC issue is only a minor problem as the changes affect only some investors.
“The system is moving smoothly, and that is the reason we are seeing an increase in the number of folios and SIP accounts.
"Ninety-three per cent of MF accounts have KYC Validated or KYC Registered status; only 3 per cent of accounts have KYC Hold status,” he said.
On the Securities and Exchange Board of India’s direction, KYC registration agencies, or KRAs, put all the KYC records into three buckets — KYC Validated, KYC Registered/Verified, and KYC On Hold.
The changes in KYC norms from April 1 make it mandatory for investors to have validated KYC status to start investing in MF schemes offered by fund houses in which they are not already invested.
Last month, KYC registration agencies released a joint statement saying that 73 per cent of the 108.3 million KYC records were validated as of March 31, 2024.
The industry says it has been communicating with the rest of the investors to get their KYCs validated.
“The industry is addressing concerns for a smooth process.
"Together with AMCs, distributors, and other stakeholders, we are committed to facilitating a seamless KYC validation process for all, thereby ensuring the integrity and accessibility of MF investments across the board,” Chalasani said.
