Two years of lacklustre equity returns and bouts of volatility have changed the way retail investors put money into mutual funds. Rather than trying to time the market through lump-sum investments, they are increasingly taking the systematic investment plan (SIP) route — a shift that should cheer mutual fund managers.
SIPs accounted for as much as 83% of total inflows into equity schemes in FY26, up sharply from 57% in FY25 and 67% in FY24, according to data shared by the Association of Mutual Funds in India (Amfi).
The trend appears to be strengthening in FY27. In August 2026, SIPs hit an all-time high of Rs 32.297 crore and contributed 89% of equity fund inflows, suggesting that investors are increasingly choosing to stagger their investments rather than commit large sums at one go.
The shift is particularly significant because it has come during a prolonged period of muted equity market returns. Fund industry executives say volatility, greater investor awareness, easier digital access and growing participation from smaller cities have combined to make SIPs the preferred route for retail investors.
“SIPs have entered the lexicon of retail investors,” said Anand Vardarajan, MD & CEO, Tata Mutual Fund. He attributed their popularity partly to sustained investor-awareness campaigns. SIPs also allow investors in smaller towns and cities to participate with relatively small amounts instead of having to accumulate money for a lump-sum investment, he said.
Rishi Kohli, chief investment officer at Jio BlackRock AMC, described SIPs as a disciplined way of staying invested through market volatility. Rising financial literacy, broader digital access and growing participation from tier-2 and tier-3 markets have strengthened the trend, while low minimum investment amounts, seamless digital onboarding and wider distribution have lowered entry barriers.
Raghav Iyengar, CEO of 360 One Asset, said the resilience of SIPs across market cycles has strengthened retail investor conviction, aided by digital onboarding and UPI mandates. Varun Gupta, CEO of Groww Mutual Fund, said SIPs reduce the need to make a large allocation at one point in time — an advantage that becomes particularly important when markets are volatile.
The flip side of the SIP boom has been a decline in the relative importance of lumpsum investments in equity funds.
Kohli said lumpsum investments have become more selective amid market volatility and subdued returns. Investors have also been allocating more money to gold, silver, hybrid and multi-asset strategies, reducing the amount available for one-time investments in pure equity schemes.
“Lumpsum investing demands a view on timing, and investors are increasingly unwilling to take that view,” Iyengar said. “With valuations debated and volatility elevated, deploying capital in one tranche feels riskier than it once did.”
There is also a demographic dimension to the shift. Iyengar pointed to the growing presence of younger, salaried investors whose investible surplus accumulates every month rather than through occasional windfalls. For such investors, systematic investing is a more natural fit.
Gupta agreed that volatility has reduced investors’ willingness to commit large sums to equities at one go, pushing more flows towards SIPs.
The trend has not been entirely one-way. The prolonged spell of muted returns and volatility has also led to higher SIP redemptions, even as the industry continues to add new investors.
Fund managers, however, believe the persistence of SIP flows through the market downturn is evidence that the product is becoming more deeply embedded in household investing behaviour.
Kohli described FY26 as an important stress test for SIPs, arguing that their resilience despite market headwinds suggests investors increasingly regard them as long-term commitments rather than investments to be stopped when markets turn volatile.
Iyengar said SIPs are particularly suited to flat or volatile markets because they allow investors to accumulate units across different price points. Sustaining participation through a prolonged period of weak returns, however, would depend on continued investor education and engagement by advisers, he added.
Gupta said SIPs should remain relevant even if volatility persists. While headline indices have delivered muted returns over the past two years, some SIP strategies in the multi-cap, mid-cap and small-cap categories have generated stronger returns, he said.
The balance between SIP and lumpsum flows could still shift with market conditions. But for now, the numbers point to a structural change in retail behaviour: rather than waiting for the “right” time to enter equities, a growing share of investors is choosing to invest a little every month and stay the course.