Market volatility puts lump-sum investing in focus as SIP growth slows

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Market volatility is putting lump-sum investing in focus as the once-rapid growth in systematic investment plan (SIP) loses momentum. While monthly SIP contributions have hit a record, their growth has slowed, even as the industry's assets continue to expand.
Monthly SIP contributions rose to a record ₹32,490 crore in September, but their year-on-year growth rate fell to 10.7% from 52.8% in September 2024, according to a Mint analysis of data from the Association of Mutual Funds in India (Amfi). The share of active SIP folios in total mutual fund folios also dropped to 35.2% from 47% over the same period.
The widening gap between total mutual fund folios and active SIP folios suggests that mutual fund industry growth is extending beyond regular SIPs. Investors can pour money into mutual funds either through SIPs or lump sum investments.
Market volatility may be prompting some investors with accumulated savings to consider lump-sum investments to take advantage of falling prices. The data on lump-sum investments are not available.
“The data is more indicative of total mutual-fund folios growing faster than SIP accounts,” said Akshay Rao, head of product and strategy at Tata Asset Management. “This rapid growth is being driven by a wider range of products and investor needs—ETFs, index funds, sectoral and thematic funds, debt funds, liquid funds and NFOs—where investments are often also made as lump sums or through non-SIP modes.”
The Nifty 50 has fallen 9.43% since the US-Iran war began on 28 February, touching 22520.45 on 9 October. Turnover in the benchmark index has fallen 36.74% to ₹26129.26 crore in the same period.
“The slowdown can largely be attributed to one key factor: the sharp moderation in market returns,” said Ritesh Pathak, deputy chief business officer (CBO) at Motilal Oswal Asset Management. “Over the past two years, equity markets have delivered relatively subdued, and at times negative, returns, which has taken away the strong Wealth-creation momentum seen earlier.”
“Existing investors stay disciplined, but fresh retail participants—especially smaller investors—are stepping back,” he added.
The divergence between mutual fund folios and SIP accounts has also become more pronounced. In September, mutual fund folios grew to 28.62 crore, a jump of 36% when compared to the same period two years ago. Mutual fund assets surged to ₹82.64 trillion during this period from ₹67.09 trillion in September 2024.
Active SIP folios grew a modest 2% to 10.06 crore in the past two years. Monthly SIP contributions surged to ₹32,490 crore from ₹24,509 crore in September 2024.
The widening gap suggests that mutual fund industry growth is increasingly being driven by investors and investment routes beyond regular SIPs.
Madhu Lunawat, chief executive officer (CEO) at The Wealth Company, said the slowdown also needs to be seen in the context of a much larger base.
“A 40-50% annual growth rate becomes progressively difficult to sustain as the base expands. This is the classic base effect. At ₹32,000 crore-plus of monthly contributions, even a 14% growth rate represents an incremental annualized flow of roughly ₹48,000 crore compared with the level a year ago,” she said.
Investor expectations may also be changing after the strong equity-market returns of earlier years. “Some investors may have entered the market with an unrealistic expectation that their investments would compound steadily every year. When actual returns did not follow such a smooth trajectory, it may have affected their willingness to start new SIPs or increase existing commitments,” Lunawat said.
For investors, the growing appeal of lump-sum investing also comes with risks. Those who wait for the right entry point may miss a market recovery, while investors deploying large amounts at once risk greater exposure to short-term price swings, experts said.
SIP growth is expected to revive at a moderate pace going ahead. “I would expect SIP growth to revive, although probably at a more measured pace rather than through another sharp acceleration. SIPs will remain the core wealth-creation route, while lump-sum flows will provide an additional avenue for investors deploying accumulated savings,” Pathak said.
Lunawat, however, said expecting a 40%-50% growth in SIPs is no longer realistic. “Mutual fund penetration outside the largest cities still has substantial headroom; household financialization continues; digital onboarding has reduced transaction friction; and awareness of equity-oriented investments for long-term wealth creation has improved considerably.”
Meanwhile, the number of mutual fund scheme launches was broadly unchanged at 28 in September 2026, compared with 27 in September 2024.
Apoorva is a Mumbai-based journalist at Mint who covers the Securities and Exchange Board of India (SEBI), tracking the pulse of India’s capital markets, regulatory developments and the people who operate within them. She holds a postgraduate diploma in business and financial journalism from the Asian College of Journalism, where she developed a strong foundation in markets, companies, and economic policy. She began her journalism journey with an internship at Bloomberg, where she worked across beats such as real estate, infrastructure, capital markets, and deals, which helped her understanding of business and finance.<br><br>She is guided by the belief that everything in this world can be explained in simple and fewer words, and that idea shapes how she approaches her writing. She aims to cut through complexity and present nuanced regulatory and financial developments in a way that is both accessible and meaningful to readers.<br><br>When she is not tracking market chatter, Apoorva can usually be found deep into a fiction novel or out on a long run. She is also a trained classical dancer in Bharatanatyam, Mohiniyattam, and Kathakali.
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