How SIP momentum is fuelling the mutual fund equity segment? Motilal Oswal explains

Motilal Oswal explains. How SIP momentum is fuelling the mutual fund equity segment? Motilal Oswal explains. Equity flow remains strong driven by SIPs

Money Poise Money Poise
Oct 23, 2023 - 19:11 Updated: Oct 24, 2023 - 23:15
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How SIP momentum is fuelling the mutual fund equity segment? Motilal Oswal explains
The brokerage report states that from October 23, there has been some pressure on gross flows owing to the Shraddha Paksha period.

Mutual Funds: According to a recent study from domestic brokerage Motilal Oswal Financial Services, total stock flow remains high, powered by Systematic Investment Plans (SIPs). However, there has recently been a slowdown in gross flows due to Shraddha Paksha, as well as an increase in redemptions as consumption demand improves, it noted.

Equity segment flows healthy driven by strong SIP momentum

According to the brokerage report, the Shraddha Paksha holiday has put some strain on gross flows since October 23.  This is expected to go up after Diwali.

"However, SIP momentum has remained strong, and penetration is increasing in lower-tier cities." Cancellation and bounce rates have decreased significantly in recent months. SIP ticket sizes have also increased in smaller towns and cities. "In terms of count, almost 95% of SIPs are in the equity segment," according to the research.Small-cap funds have seen the most demand within the equities segment. 

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According to the brokerage report, Nippon AMC and HDFC AMC continue to draw big inflows, underpinned by sustained excellent fund performance.

Despite the fall, inflows through SIPs (Systematic Investment Plans) reached a new all-time high of 16,042 crore last month, according to figures issued on 11 October by the Association of Mutual Funds in India (AMFI). The overall SIP amount was at 90,304 crore in the first six months of the current fiscal year, with a good run rate of 15,050 crore.

Debt fund sees competition from FDs

"On the debt side, momentum remains weak as large institutional investors remain on the sidelines due to global geopolitical tensions." FD is emerging as a more powerful product when compared to longer-term MF plans. "However, demand for shorter duration (1 year) schemes remains strong," the brokerage stated in its report.

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According to AMFI data, debt-oriented schemes saw net outflows of 1.01 lakh crore in September, the second straight month of fall.

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