SIP flows above ₹25,000 Crore in Nov-24, but SIP stoppage spikes

13 Dec 2024 , 10:46 AM

SIP FLOWS MARGINALLY LOWER IN NOVEMBER 2024

For the first eight months of Fiscal FY25 the SIP flows averaged ₹23,071 Crore a month. Interestingly, the gross SIP inflows at ₹25,320 Crore in November 2024 was marginally lower than the ₹25,323 Crore reported in October. The fall may be almost significant but what matters is that this is the first MOM fall in gross SIP flows since June 2023. On the positive side, the gross SIP flows have been above ₹25,000 Crore for two months in a row, despite November having 3 fewer working days compared to October 2024. Total MF SIP folios stands at a whopping 22.08 Crore as of November 2024.

If we track the numbers for the first eight months, the gross SIP flows in FY25 promise to be substantially higher than FY24. In fact, the annualized SIP flows for FY25 are already 38.97% above the previous year average. Incidentally, this is the best yoy SIP volume growth in the last 7 years. SIP flows. The month of November 2024 also saw the overall mutual fund AUM rising to ₹68.08 Trillion from ₹67.26 Trillion at the end of October 2024. Of course, the AUM accretion is a mix of inflows and price appreciation, but that only applies to equity based assets. For pure active debt funds, the growth has predominantly come from flows. Let us now turn to the granular SIP story for the latest month of November 2024.

NOVEMBER SIP FLOWS TAPER FOR FIRST TIME SINCE JUNE 2023

The small fall in monthly SIP flows, actually signifies the end of a 17-month trend when each subsequent month had shown higher SIP flows than the previous month. However, we need to factor that October had 21 working days while November had just 18 working days. If you compare the November 2024 SIP flow with the November 2023 SIP flow, it is higher by a domineering 48.3% yoy. Here is the gross monthly SIP flow picture for last one year.

Monthly MF Data	Monthly SIP Inflows (₹ Crore)
Nov-23	17,073
Dec-23	17,610
Jan-24	18,838
Feb-24	19,187
Mar-24	19,271
Apr-24	20,371
May-24	20,904
Jun-24	21,262
Jul-24	23,332
Aug-24	23,547
Sep-24	24,509
Oct-24	25,323
Nov-24	25,320

Data Source: AMFI

Gross SIP flows into mutual funds have now averaged ₹23,071 Crore in the first 8 months of FY25. While SIPs and NFOs are boosting the folio count on one side, the customer mix is also making a difference. For instance, the surge in Gen-X and Gen-Z investors means that there is a greater focus on financial planning and SIPs fit perfectly into financial planning. Systematic investment planning, with its elegant rupee cost averaging edge, simplicity, and wealth creation potential across market conditions; has rightly emerged as the first choice.

SIP FLOWS – WHAT ABOUT THE EIGHT YEAR ITCH?

The table below captures month-wise SIP flows into mutual funds since April 2016. Each milestone of an additional ₹1,000 Crore has been highlighted in bold.

Month	FY25	FY24	FY23	FY22	FY21	FY20	FY19	FY18	FY17
March		19,271	14,276	12,328	9,182	8,641	8,055	7,119	4,335
February		19,187	13,686	11,438	7,528	8,513	8,095	6,425	4,050
January		18,838	13,856	11,517	8,023	8,532	8,064	6,644	4,095
December		17,610	13,573	11,305	8,418	8,518	8,022	6,222	3,973
November	25,320	17,073	13,306	11,005	7,302	8,273	7,985	5,893	3,884
October	25,323	16,928	13,041	10,519	7,800	8,246	7,985	5,621	3,434
September	24,509	16,042	12,976	10,351	7,788	8,263	7,727	5,516	3,698
August	23,547	15,814	12,693	9,923	7,792	8,231	7,658	5,206	3,497
July	23,332	15,245	12,140	9,609	7,831	8,324	7,554	4,947	3,334
Jun	21,262	14,734	12,276	9,156	7,917	8,122	7,554	4,744	3,310
May	20,904	14,749	12,286	8,819	8,123	8,183	7,304	4,584	3,189
April	20,371	13,728	11,863	8,596	8,376	8,238	6,690	4,269	3,122

Data Source: AMFI

Here are some key takeaways from the 8-year SIP flow data.

a. The previous fiscal year of FY24 was the best full year in terms of milestones, with 5 milestone months. However, FY25 has already matched that feat with 5 milestones in just 8 months. We should get to see more in the remaining 4 months.

b. What was the average gap between two milestones? A quick ballpark figure is 3-6 months, although it is just 2 months in FY24 and less than 2 months in FY25. The FY25 average SIP is about 6.30X times the average SIP size in FY17. The longest milestone wait was for 27 months from Dec-18 to Mar-21 on account of pandemic worries.

With average SIP flows at ₹23,071 Crore in FY25, a logical target by March 2025 would be to stabilize at around ₹30,000 Crore of SIP flows a month. Or at least by early FY26.

READING BETWEEN THE LINE OF SIP TICKET STORY?

Since FY22, the SIP flows have been progressively improving each year. Clearly, FY25 is going to be a lot better than the previous years. Here is a quick dekko.

Financial Year	Gross Annual SIP flows (₹ Crore)	Average Monthly SIP Ticket (AMST)	YOY Accretion in (%)
FY16-17	₹43,921 Crore	₹3,660 Crore
FY17-18	₹67,190 Crore	₹5,600 Crore	53.01%
FY18-19	₹92,693 Crore	₹7,725 Crore	37.95%
FY19-20	₹100,084 Crore	₹8,340 Crore	7.96%
FY20-21	₹96,080 Crore	₹8,007 Crore	-3.99%
FY21-22	₹124,566 Crore	₹10,381 Crore	29.65%
FY22-23	₹155,972 Crore	₹12,998 Crore	25.21%
FY23-24	₹199,219 Crore	₹16,602 Crore	27.73%
FY24-25	₹276,852 Crore	₹23,071 Crore	38.97%

Data Source: AMFI

If you look back at the yoy growth in the average monthly SIP ticket (AMST), the growth has been robust each year, except for the 2 years of the pandemic, which is understandable. In fact, year FY25 has been the best growth in the last 7 years, despite a much higher base. The CAGR accretion in SIP flows in the last 4 full years post the pandemic has been 30.29%.

SIP FOLIOS IN NOVEMBER 2024 – IS RETAIL INTENSITY WANING?

The gross accretion to SIP folios continue to remain robust in November 2024. In FY25, May 2024 saw gross SIP registrations of 49.74 Lakhs, June 55.13 Lakhs, July a record 72.62 Lakhs, August 63.93 Lakhs, September 66.39 Lakhs, and October 63.70 Lakhs. November SIP registrations were relatively lower at 49.47 Lakhs. The outstanding SIP folios increased from 1,012.34 Lakhs in October 2024 to 1,022.67 Lakhs in November 2024. The net accretion is 10.33 Lakh SIP folios or 1.02%. This is the lowest SIP folio accretion since May 2024.

What about SIP AUM yoy? Between October 2024 and November 2024, the SIP AUM rose from ₹13,30,430 Crore to ₹13,54,105 Crore; a growth of 1.78% on sequential basis. While the flows were tepid, the robust performance of the indices helped the AUM. As of the close of November 2024, the SIP folios accounted for 46.32% of total MF folios while the SIP AUM accounted for 19.89% of the overall MF AUM.

SIP STOPPAGE RATIO – THINGS GET WORSE IN NOVEMBER 2024

AMFI reports monthly SIP flows on a gross basis. That gap between gross and net SIP flows is explained by the SIP stoppage ratio. SIP stoppage is the ratio of SIP accounts discontinued to new SIP accounts opened; and shows stickiness of SIPs. Lower the SIP Stoppage Ratio, the better it is. May 2024 saw an exceptional spike amidst election uncertainty, but SIP stoppage has spiked to 79.12% in November; pushing up the average for FY25 to 62.25%.

Apr-24	May-24	Jun-24	Jul-24	Aug-24	Sep-24	Oct-24	Nov-24	FY25
52.24%	88.38%	58.68%	51.40%	57.14%	60.72%	60.91%	79.12%	62.25%

Data Source: AMFI (# – 8 months data)

Since July, the SIP stoppage ratio is consistently up; and this is an outcome of the sense of uncertainty at higher levels of the market. However, the spike has been very sharp in November 2024. The average SIP stoppage ratio for FY25 is up 192 bps over last month.

FY25 ANNUALIZED SIP STOPPAGE RATIO ABOVE PANDEMIC PEAK

Here is the SIP stoppage ratio in last 5 completed fiscal years and for 8 months of FY25.

FY 2019-20	FY 2020-21	FY 2021-22	FY 2022-23	FY 2023-24	FY 2024-25 #
57.84%	60.88%	41.74%	56.94%	52.41%	62.25%

Data Source: AMFI (# – 8 months data)

The SIP stoppage ratio for FY24 at 52.41% was lower than FY23. However, FY25 has seen a spike in the SIP stoppage ratio to 62.25%. The concern is that, this is above the pandemic peaks, showing that investors are worried about high levels of the Nifty and Sensex. Ideally, a SIP stoppage ratio of 40% to 45% is reasonable. The growth in SIP folios is a positive sign. However, mutual funds will have to arrest the spike in SIP stoppage ratio, if the gains of financialization of savings have to be fully realized. Perhaps, the AMFI can start by making a transparent disclosure of net SIP flows each month; instead of just the gross figure.