SIP flows cross ₹25,000 Crore for first time in October 2024

13 Nov 2024 , 09:30 AM

25K SIP MARK IS NOW DONE AND DUSTED

Fiscal FY25 has been special for SIPs with SIP flows averaging above ₹20,000 Crore in each of the 7 months. With the October 2024 SIP flows at a record high of ₹25,323 Crore, the 25K target is finally taken out. Total MF SIP folios stands at a whopping 21.65 Crore as of October 2024. Going by early numbers, gross SIP flows in FY25 promise to be substantially higher than FY24. In fact, the annualized SIP flows for FY25 are already 37.03% above the previous year average. SIP flows. The month of October 2024 saw overall mutual fund AUM rising marginally to ₹67.26  Trillion, compared to ₹67.09 Trillion at the end of September 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. Here is how SIP flows evolved over the last one year.

OCTOBER 2024 SIP FLOWS AT RECORD ₹25,323 CRORE

Since June 2023, the SIP flows have created new record high SIP collections for 17 months in a row. Each month, since June 2023, has seen higher SIP inflows relative to the previous month. This kind of decisive positive trend was not seen in the last 8 years for which data is available. If you compare the October 2024 SIP flow with the October 2023 SIP flow, it is higher by 49.6% yoy. Here is the gross monthly SIP flow picture for last one year.

Monthly MF Data	Monthly SIP Inflows (₹ Crore)
Oct-23	16,928
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

Data Source: AMFI

Gross SIP flows into mutual funds have now averaged ₹22,750 Crore in the first 7 months of FY25. While SIPs and NFOs are boosting folios as a product, in terms of the customer mix, it is the Gen-X and Gen-Z customers that are gravitating more towards long term financial planning via mutual funds. Indian retail investor  are gradually buying the idea of systematic investment planning, with its elegant rupee cost averaging advantage, simplicity, and an amazing effectiveness in creating wealth for individuals, irrespective of market cycles.

SIP FLOWS – EIGHT YEAR ITCH GETS MORE INTERESTING

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		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.

1. 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 7 months. Clearly, we are likely to see bigger records in the current fiscal.
2. What was the average gap between two milestones? A quick ballpark figure is 3-6 months, although is just 2 months in FY24 and less than 2 months in FY25. The October 2024 SIP flows are about 7.37X times the October 2016 SIP flows.
3. The longest wait between two milestones of 27 months was between December 2018 and March 2021; but that was exceptional due to the pandemic. Otherwise, the SIP flows have been growing at a robust pace all through.

With average SIP flows at ₹22,750 Crore in FY25, a logical target by March 2025 would be to stabilize at around ₹30,000 Crore of SIP flows a month. That is not too far off.

WHAT WE READ FROM THE SIP TICKET STORY?

If FY23 was great for SIP flows, FY24 was even better and FY25 has started with a bang and promises to be much bigger. At ₹1,99,219 Crore, FY24 was the best full year in SIP collections. However, FY25 promises to be sharply better than that.

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	₹272,997 Crore	₹22,750 Crore	37.03%

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. There is a positive side to the pandemic phase. The lost years of the pandemic laid the foundations for future growth in SIP flows; with the spillover effects still evident.

SIP FOLIOS IN OCTOBER 2024 – RETAIL INTENSITY THE BIG STORY

The gross accretion to SIP folios continue to remain robust in October 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, and September 66.39 Lakhs. October SIP registrations are slightly lower at 63.70 Lakhs. The outstanding SIP folios increased from 987.44 Lakhs in September 2024 to 1,012.34 Lakhs in October 2024 (crossing the 10 Crore folio mark for the first time ever). The net accretion is 24.90 Lakh SIP folios or 2.52%. The SIP folios today are about is 46.8% of total mutual fund folios as of the close of October 2024.

What about SIP AUM yoy? Between September 2024 and October 2024, the SIP AUM fell from ₹13,81,704 Crore to ₹13,30,430 Crore; a contraction of -3.71% on sequential basis. This is largely accounted for by the 8% correction in the Nifty and the Sensex from peak levels, amidst frenetic FPI selling.

SIP STOPPAGE RATIO – THINGS GET TIGHTER IN SEPTEMBER 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 calculated as the ratio of SIP accounts discontinued to new SIP accounts opened. Lower the SIP Stoppage Ratio, the better; as it shows stickiness in SIP accounts. While May 2024 may have been an exceptional spike amidst election uncertainty, the SIP stoppage ratio has stayed above 60% in the last 2 months. That has also pushed the average for FY25 to 60.33%.

Apr-24	May-24	Jun-24	Jul-24	Aug-24	Sep-24	Oct-24	FY25 #
52.24%	88.38%	58.68%	51.40%	57.14%	60.72%	60.91%	60.33%

Data Source: AMFI (# – 7 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. Recent FPI selling is unlikely to help the cause. The average SIP stoppage ratio for FY25, till date, has inched up from 60.23% to 60.33%.

FY25 ANNUALIZED SIP STOPPAGE RATIO NEAR PANDEMIC PEAK

Here is the SIP stoppage ratio in last 5 completed  fiscal years and for 7 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%	60.33%

Data Source: AMFI (# – 7 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 60.33%. This is very close to the pandemic highs. Investors appear to be getting tentative at higher levels of the market. 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. That is where mutual funds are faltering currently!