Month-on-Month (M-o-M) data isn't encouraging either. As compared to total equity inflows of Rs 4,487 crore in December 2018, the mutual fund industry witnessed a drop of 8%.

However, not all hope is lost.

As compared to Rs 8,022 crore in December 2018, the industry collected Rs 8,064 in January 2019 via SIPs (Systematic Investment Plans). There's been a healthy 21% growth in SIP collections on Y-o-Y basis.

Table: SIPs - Still going strong...

Month	SIP inflows (Rs in crore)
Jan-19	8,064
Dec-18	8,022
Nov-18	7,985
Oct-18	7,985
Sep-18	7,727
Aug-18	7,658
Jul-18	7,554
Jun-18	7,554
May-18	7,304
Apr-18	6,690
Mar-18	7,119
Feb-18	6,425
Jan-18	6,644

(Source: AMFI)

With this, the mutual fund industry has approximately 2.57 crore SIP accounts now. AMFI data further suggests that the industry has so far added around 9.31 lakh new SIP accounts every month on an average in FY 2018-19.

While persistence of new SIP registrations is a good sight amidst dwindling new inflows in equity mutual funds, it remains to be seen how long the retail investors hold on to their guns.

Nonetheless, addition of new accounts has also slowed. Over last three months, i.e. November 2018, December 2018, and January 2019; the net addition to the tally of SIP accounts has just been 5 lakh-just 54% of average additions for FY 2018-19 so far.

Mr N.S. Venkatesh, CEO, AMFI, sounded content with the stickiness of SIP trend. 'Despite acute market volatility owing to credit events and global uncertainty, retail investors continue to repose their faith in the India growth story. This is quite evident from the SIP flows and folio numbers, which continue to rise sequentially. On debt asset under management, with the Reserve Bank of India easing the rates, we expect to see flows rise in the coming weeks.'

Are there more reasons for the steep fall in net inflows in equity schemes?

Discontinuation of upfront commissions: According to the SEBI circular dated October 22, 2018, the capital market regulator asked mutual fund houses to adopt full trail model of commissions in all schemes. Discontinuation of upfront commissions and up-fronting of commissions has severely disincentivised mutual fund distributors.

However, as the up-fronting of commissions, that is paying trail commissions upfront, is allowed for money collected through SIPs, distributors seem to be concentrating only on improving their SIP tally.

But does that also mean if upfronting of commissions is also discontinued for SIP collections, the monthly SIP inflows will nosedive?

They may not fall as steeply as the lump sum collections have, but there's a possibility that upfronting of commissions has also been the force behind robust SIP inflows.

Lacklustre performance across equity scheme categories: In the past oneyear, a majority of large cap funds, mid cap funds, small cap funds, multi cap funds, value funds, large and mid cap funds have underperformed their respective benchmark indices. As a result, those who started SIPs towards the end of 2017 haven't made much money in last 12-15 months.

If markets resume their uptrend and stage a significant rally, SIP collections may rise. It would be interesting to see if that brings about any change in the trend of lump sum investments.

Did you think about discontinuing SIP any time during last 6-8 months?

If yes, you need to revisit basics of mutual fund investing.

Why do you need SIPs?

Going with Systematic Investment Plans enforces a disciplined approach towards investing. SIPs work on the simple principle of investing regularly which enable you to build wealth over the long-term.

SIPs help you average out your costs without making you time the market.

Prolonged bull or bear phases deter investors from continuing their SIPs. Under prolonged bull phases, there's no rupee-cost averaging. And under prolonged bear phases, despite accumulating more units, the market value of one's investment tends to be lower than the amount invested.

Why should you continue SIPs?

[Read:  When Is The Best Time To Sell Your Mutual Fund?]

• Falling markets allow you to gather more units since the Net Asset Value (NAV) of a scheme falls too. When markets go up, naturally, the NAV rises and you earn high returns on your investments (as you accumulate more units during the downturn).

• Equity mutual funds are meant for the long term. When you discontinue SIPs in falling markets, you shift your focus from your asset allocation plan and start giving undue attention to market movements. In the short run, sentiments drive markets; but in the long run, fundamentals steer them up or down. In such cases, why not focus on fundamentals and financial goals?

• When you judge a fund based on its short-term underperformance in a bear market phase, you tend to overlook its long-term track record. A winning mutual fund could be affected during market turbulence, but the magnitude of the fall or its susceptibility needs to be evaluated carefully before you sell in a panic.

• When you stop SIP and start chasing other assets, you start inviting bigger troubles for yourself and your finances. Simply because there's no guarantee that other asset classes won't disappoint you.

If you wish to calculate the future value of your Monthly SIPs, use PersonalFN's SIP Calculator.

On the contrary, it's good to start SIPs under volatile market conditions for the following reasons:

• They allow you to beat the market volatility.

• They end the necessity of timing the market. When markets recover, you don't repent that you didn't take advantage of falling markets.

• SIPs make you a focused investor and imbibe a sense of discipline of investing regularly.

• Without committing a big sum to the markets, your investments grow steadily and gradually.

[Read:  Are SIPs Better Than Lumpsum Investments? Know Here...]

PS: If you aren't sure about which mutual funds to SIP into, don't worry! PersonalFN is offering you three premium reports that cost less than your favourite copy.

These research reports will provide you superlative guidance to select worthy mutual fund schemes to SIP, the ones that have the potential to provide BIG gains, and the ones for your tax planning this year.

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ukpnambiar@gmail.com Feb 23, 2019 Need to talk to you.

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