Mutual Funds: SIP inflows rising consistently; is this trend sustainable?

livemint.com:

The Indian mutual fund industry has been witnessing a remarkable surge in interest among investors in recent times with the Assets Under Management (AUM) growing by nearly 21 percent to touch ₹49.05 lakh crore as on November 30, 2023, up from ₹40.38 lakh crore as on November 30, 2022. At the current levels, the industry is almost halfway through its targeted aim of achieving an AUM of ₹100 lakh crore over the next few years.

A significant point to note in this growth story is that the total number of unique investors in mutual funds crossed the four-crore mark, which clearly indicates the growing interest among retail investors for investing in equities through the mutual fund route. More interestingly, nearly one-fifth (19 percent) of the industry’s total AUM is backed by inflows through theSIP (Systematic Investment Plan) route, which is considered to be convenient investment option particularly for retail investors, and the share is growing at a fast pace.

The burgeoning middle class and rising financial literacy is prompting more and more people to resort to financial planning so as to accrue savings. The outlook is positive from all aspects including growth and employment. As indicated by the Reserve Bank of India, the country’s economy is set to grow. Employment generation and government spending is high. Financial intermediaries are expanding into smaller towns and cities aiding higher financial literacy among young population. This, coupled with the rising aspiration will help spur further growth of SIPs.

The various development efforts undertaken by the government are yielding result with localisation and growth happening all across beyond metro cities. There is an exponential growth particularly in the Tier II,