SIP outflows: Investors redeem over Rs 22,000 crore in 3 months

Between September and November, though the total SIP contribution was Rs 39,323.47 crore, redemption was to the tune of Rs 22,169.46 crore, indicating that investors cashed out amid the volatility in the market. This means only Rs 17,154 crore was the net investment in SIPs during the three-month period.

Of the total redemption, more than 50 per cent of the money was pulled out by retail investors from SIPs in November, as per the data available with the mutual fund companies. When contacted by The Indian Express, AMFI chief NS Venkatesh was not available for comments.

In November, while the SIPs contribution was Rs 13,306.49 crore, retail investors pulled out Rs 10,049.95 crore from their SIP accounts. In September and October, redemptions were Rs 6,577.63 crore and Rs 5,541.88 crore, respectively.

“Everybody’s investment attained a new high after a long wait. Due to this, some people decided to take money out,” said Dhirendra Kumar, founder-CEO, Value Research. Total assets under management of SIP schemes were Rs 683,852 crore as of November 2022.

Of the Rs 22,169.46 crore, the highest redemptions were seen in the equity or growth schemes. Retail investors pulled out Rs 19,303.05 crore alone from the equity scheme. This was followed by the hybrid scheme, which witnessed redemption of Rs 1,360.8 crore between September and November.

The monthly data available on the website of Association of Mutual Funds in India only shows the gross investment through SIP route and it does not take into account the redemptions in a particular month.

Higher demand for money during the festive seasons in September and October also led to redemption, market participants said. On November 30, 2022, the BSE Sensex surged over 500 points or 1 per cent in trade to surpass the 63,300 level. The index hit a record high for the fifth session in a row at 63,303.01 before closing at 63,099.65. “The November rally in the stock markets prompted some investors to book profits from the SIP schemes,” said a fund manager.

On December 23, while the 30-share BSE Sensex fell 980.93 points, or 1.61 per cent, to close below the 60,000 level at 59,845.29, the broader NSE Nifty declined by 320.55 points, or 1.77 per cent to close at 17,806.8.

Market sources don’t rule out more redemptions from SIP plans in the wake of volatility in the market amid the rising Covid scare in many countries. “Historically, we have traded at a premium to emerging markets but right now the premium of Indian equities over other emerging markets is almost high at 139 per cent. This is partly because of the massive outperformance of Indian markets over emerging market peers. As our performances improved, our weight in MSCI Emerging Market has also increased from 7 per cent in 2020 to 14.8 per cent in November 2022,” Kotak Mutual Fund said in a report.

When markets were near all-time highs recently, the rally was not broad-based as only 5 per cent of Sensex stocks were at a lifetime high level. This means the rest of these stocks are still languishing at lower levels despite a rise in the Sensex.