SIPs are now a steady growth engine for mutual funds: A Balasubramanian
Systematic investment plans (SIPs) have become a strong and stable driver of growth for the mutual fund industry, according to A Balasubramanian, MD & CEO of Aditya Birla Sun Life AMC.
Speaking to CNBC-TV18, on the latest AMFI monthly numbers, he said, “SIPs, in particular, are now picking up more as a permanent source of flows. That continues to remain a strong source of flows for the mutual fund industry.”
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Balasubramanian noted that while new fund offers (NFOs) saw large collections last year, especially from thematic fund launches, that phase has passed. The industry is now seeing consistent flows into existing schemes, especially flexi-cap, balanced, and small- and mid-cap funds. “One of the fundamental shifts we are quite happy to see is actually the continuation of flows into existing funds,” he said.
Investor maturity
He also pointed to growing investor maturity as a key positive development. Over the last 2-3 years, investors have gained more experience and are now more disciplined in their mutual fund investments, particularly through SIPs.
The trend marks a shift from earlier patterns where large NFO collections — sometimes ₹20,000-25,000 crore in a month — drove headline flows. Those peaks have now moderated, but the quality and consistency of inflows have improved.
Most cash invested
On the liquidity side, Balasubramanian said the fund house typically does not hold high cash levels and remains largely invested. Cash levels are maintained at around 3-5% and are mainly used for operational needs like margin requirements. “We generally don’t take a cash call,” he said. “Whatever inflows come in may temporarily lie in cash, but are ultimately deployed.”
Despite current market uncertainty, the fund house prefers not to wait on the sidelines. Instead, it looks for opportunities to increase exposure in areas where it has high conviction.
He added that equity market valuations have become more comfortable in recent months, aided by supportive policy measures from the government and the central bank. The valuation concerns that previously made fund managers cautious about deployment have eased.
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Balasubramanian remains optimistic about the market’s ability to withstand volatility. “Our belief is that the market will again show resilience, despite the current pressures,” he said.
Watch accompanying video for entire conversation.