You Just Cannot Ignore The Macro Picture

In the last few months, there has been a lot of furore over the spike in the SIP stoppage ratio, which is the ratio of discontinued SIPs to new SIPs in any period. For the quarter to March 2025, the SIP stoppage ratio was above 100% in each of the months, even crossing 128% in March 2025. It may be noted here that the AMFI reports gross SIP flows and not the net SIP flows. However, a much clearer picture emerges if you look at the gross SIP flows over the last 8 years. The table below captures the gist of the story of how SIP flows have gradually built heft, year after year since FY17.

Post Pandemic Growth In Sips Has Been Incredible

If you look at the average SIP flows in FY25, it is 6.6 times the average monthly SIP flows in FY17. That is substantial growth over the last 8 years. If you look at the 4 years post the pandemic i.e., from FY21 to FY25, the average monthly SIPs have grown more than 3-fold from ₹8,007 crore to ₹24,113 crore. That translates into an impressive CAGR of 31.73%. That is probably the narrative that we must not miss. Above all, the yoy growth in SIP flows in FY25 at 45.24%, is the best year-on-year growth since FY17, which is all the more commendable as it is on a much higher base. What is the broad message about SIP flows that we gather from this data table above?

There Are 5 Key Takeaways On The India Sip Flow Narrative

Here are the 5 key takeaways about SIPs, that we can infer from the growth in SIP flows over last 8 years.

• The phenomenal growth in SIPs has almost coincided with the rise in the number of young investors (under 30) in the markets. They have better buy-in for mutual funds.

• The surge in SIPs is also indicative of the fact that mutual funds are becoming less of a pure marketing product and more of a tool for personal financial goal planning.

• Indian mutual funds had seen massive folio contraction between 2009 and 2014. The current situation is nowhere even close to that; since gross SIPs are still growing.

• One reason for the proliferation of SIPs post pandemic is the lesson that those who held on to their MFs during the pandemic ended up creating substantial wealth.

• One good trend in the NFOs is that the preponderance of thematic funds-based NFOs is reducing. This is likely to make the SIP flows less volatile in future.