SIP account addition moderates in May as average portfolio value falls amid choppy market

Even though inflows via Systematic Investment Plans (SIP) of mutual funds remains firm, account additions shows signs of moderation amid falling SIP portfolio value due to the market volatility. The net SIP accounts addition was at 9.4 lakhs in May 2022, the lowest in 12 months, taking the number of total accounts to 548 lakhs.

The average portfolio value of SIP investors shrunk 15% to Rs 1 lakh in May 2022, compared with the peak of around Rs 1.2 lakh reached in August 2021, the data from the Association of Mutual Funds in India (AMFI) show. The portfolio value in May was the lowest in twenty months.

The moderating account addition weighed on the SIP opening-to-closure ratio, which dropped to 1.9 in May 2022 compared with the one-year average of 2.4. Similar to the net addition, the gross new SIP account addition in May was also at a 12-month low of 19.7 lakhs.

The average SIP portfolio value dropped in eight out of the past ten months. However, the total assets under management of the SIP linked funds rose by 21% year-on-year to Rs 5.6 lakh crore in May, faster than the 12% growth in the total AUM of the mutual fund industry in India at Rs 37.2 lakh crore.

A prime driver of the SIP AUM growth is the consistent monthly inflow. These schemes reported an inflow of Rs 1.1 lakh crore in the past 12 months. The monthly SIP inflow was above Rs 10,000 crore for ninth months in a row up to May.