The mutual fund Systematic Investment Plan (SIP) stoppage ratio jumped 128 per cent in March, consistently rising for the eighth month in a row. This means, that for every 100 new SIP accounts opened, 128 were discontinued. SIP is an investment plan wherein investors invest a fixed amount in a mutual fund scheme periodically at fixed intervals - typically once a month instead of making a lump-sum investment.
The SIP stoppage ratio is a percentage that measures the number of discontinued or expired SIPs against the number of new SIP registrations in a month.
According to the Association of Mutual Funds in India (Amfi), 51.55 lakh SIP accounts were discontinued in March, while only 40.19 lakh new SIP accounts were opened.
The rising trend in the stoppage ratio has been building for months. In February, the ratio was 122.75 per cent, up from 109 per cent in January. It was 82.73 per cent in December, 79 per cent in November, 60.91 per cent in October, and 60.7 per cent in September. In August and July, the figures were 57.14 per cent and 51.4 per cent, respectively. The monthly mutual fund SIP contribution in March also dipped to Rs 25,926 crore during the month, declining for the fourth consecutive month.
The total outstanding SIP accounts at the end of March 2025 stood at 1,005.39 lakh, declining for the fourth consecutive month.
Why More People Are Withdrawing From SIPs?
Indian stock market has continued to trade under pressure since October 2024. The benchmark Sensex and Nifty 50 have declined 12.6 per cent and 13.1 per cent, respectively, from their all-time highs hit in late September 2024. The negative yields from equity markets have unsettled many SIP investors, leading them to book their profits and stop their SIPs.
However, despite the softening of SIP activity over the past few months, the total SIP inflow in FY25 came in at Rs 2,89,352 crore, a 45 per cent growth from the preceding fiscal year's inflow of Rs 1,99,219 crore.
