• Last 4 years have seen an unprecedented rise in SIP culture among investors.
  • Tailwinds from Demonetization, “Mutual Funds Sahi Hai” campaign, and GST implementation worked wonders for the Mutual Fund industry.
  • Between 2016 till May 2019, just at the start of Modi government’s second term, the SIPs contribution by investors in Rupee terms had grown at an average annual rate of 36.70% (CAGR)
  • Higher volatility during 2018 and 2019 affected the SIP growth. Between May 2019 till March 2020 (before COVID 19 Lockdowns were imposed), the SIP contributions growth was relatively pale in comparison to its previous 3 years. The SIP contribution during this period grew @ CAGR of 6.37%.
  • COVID19 related lockdowns were imposed across India in March 2020. Also, during this month, the markets were most volatile, as SENSEX tanked by nearly 35% within a month. Many new investors who joined in the markets over last 3-4 years had not seen this kind of market behavior. Also, since economy was shut either completely or partially for several months, many white collared employees lost jobs. These factors have put pressure on the SIP inflows. For the first time since 2016, net SIP inflow has reduced on a sustainable basis. Between March 2020 till August 2020, the monthly SIP inflow has reduced by -10% (approx.) in absolute terms, and by -21.38% on CAGR basis.
  • The August 2020 figures show that the SIP inflow has gone back to the levels last seen in September 2018.

By Sameer Rastogi

18 years of experience, PG in Finance and has delivered Wealth Management lectures at IIM Lucknow, IBS Gurgaon and IIPM Delhi. Contributed to various newspapers. Strength – Application of Economic fundamentals to Investment

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