SIP Stoppage Ratio Hits Record 122% in February, Raising Investor Concerns
SIP Stoppage Ratio Hits Record 122% in February, Raising Investor Concerns
The Indian mutual fund industry is witnessing a sharp rise in SIP (Systematic Investment Plan) discontinuations, signaling growing investor caution. In February, the SIP stoppage ratio soared to an all-time high of 122%, meaning for every 100 new SIPs started, 122 were discontinued or allowed to lapse. This marks a significant increase from 109% in January and 83% in December, as per data from the Association of Mutual Funds in India (AMFI).
Key Trends in SIP Stoppage
While total SIP inflows dipped slightly to ₹25,999 crore in February from ₹26,400 crore in January, the number of active SIP accounts declined to 44.56 lakh, whereas discontinued accounts surged to 54.70 lakh. Experts attribute this trend largely to direct investors—those who invest in mutual funds without financial advisors—who are more likely to pause or stop their SIPs during market downturns.
Pravin Kulkarni, founder of UPInvest, believes that this trend may reverse as market conditions improve. “Despite a drop in inquiries, we continue to align SIPs with long-term financial goals, helping clients stay invested even in volatile markets,” he said.
Market Volatility & Its Impact
The stock market’s recent downturn has contributed to investor anxiety. Over the past six months, the Nifty 50 and BSE Sensex have fallen by 11% and 10%, respectively. AMFI CEO Venkat Chalasani, however, clarified that the increase in SIP discontinuations is not solely due to market fluctuations. He explained that February’s figures include account clean-ups that were delayed in January, as well as closures mandated by SEBI guidelines.
Investor Behavior & Portfolio Adjustments
Despite the rising stoppage ratio, Amol Joshi, founder of PlanRupee Investment Services, offers a more positive outlook. He notes that investors are not necessarily withdrawing from the market but are instead reallocating their funds. Many have shifted from mid and small-cap funds to flexi-cap or large-cap funds, while others are opting for balanced advantage or different equity categories.
“Though some SIPs are being discontinued, total inflows remain steady at around ₹26,000 crore. This indicates that investors are actively managing their portfolios rather than exiting the market,” Joshi said. He also highlighted the role of technology in facilitating quick portfolio adjustments, making it easier for investors to switch funds as needed.
SIP Stability Amid Market Fluctuations
Despite short-term fluctuations, experts emphasize that long-term investors are unlikely to exit due to temporary volatility. “SIP investments are goal-based, not driven by short-term market trends. If an investor has a financial goal for 2030, they are less likely to stop investing due to current volatility,” Joshi added.
While SIP discontinuations have risen, mutual fund inflows remain strong, with equity net inflows still exceeding ₹29,000 crore. This suggests that investor confidence in mutual funds remains intact despite short-term market corrections.
Disclaimer: The information in this article is for informational purposes only and should not be considered investment advice. Investors should conduct thorough research and consult financial advisors before making investment decisions.
