MUMBAI: The number of discontinued SIP (Systematic Investment Plan) accounts surged to a staggering 54.70 lakh in February. The number of active accounts dropped to 44.56 lakh. The stoppage ratio of the till-recently red-hot investment class among mutual funds hit an all-time high of 122%. This clearly indicates that the share of discontinued or expired SIP accounts is increasing at a faster pace than new registrations.
SIPs have grown substantially over the past decade, reflecting a significant shift in individual’s investment behaviour. From Rs 8,513 crore in February 2020, the monthly inflows have grown more than three times to reach Rs 25,999 crore in February 2025 after scaling the Rs 26,459 crore mark in December 2024.
When it comes to SIPs, the stoppage ratio is the percentage of discontinued/expired accounts relative to new registrations.
SIPs have been in focus over the past few months and the funds industry has been doubling down in its messaging, advising investors to stay long in SIPs despite a bleeding market, which has seen the indices plunging by close to 18% from their September 27, 2024, peaks.
In its latest data release earlier this week, the Association of Mutual Funds (Amfi), has said SIP inflows in February hit a three-month low of Rs 25,999 crore, down from Rs 26,400 crore in January and Rs 26,459 crore in December, while other funds saw steeper declines with inflows into equity-linked funds falling 26%, those into mid-caps plunging 35% and inflows into small-caps dipping 34% as the market selloff that began in October, intensified for the fifth month with indices losing close to 6% in February alone.
An analysis of the latest Amfi data shows that the SIP stoppage ratio has been steadily rising over the last one year. Before jumping to 122% in February, it was at 109% in January and a shade less than 83% in December, despite that month recording the highest-ever inflows of a whopping Rs 26,459 crore. This also had the total AUM of the industry declining by 4.04% to Rs 64.53 trillion from Rs 67.25 trillion in the previous month.
The investor fatigue was visible across the schemes with equity funds seeing a whopping 26% fall in inflows, while mid- and small-cap funds seeing it much steeper at close to 35 and 34% respectively, show the latest Amfi data released on Wednesday.
Venkat Chalasani, Amfi chief executive, told reporters at the data briefing that the increasing number of discontinued SIP accounts is not solely reflective of the reporting month, as it includes Sebi-mandated clean-up process that could not be completed in January but was carried out in February.
Additionally, he says some discontinued accounts are those that were closed in compliance with Sebi guidelines but could not be accounted for in January and are now being reflected in the latest data.
Chalasani further says the dip is in line with the usual trend seen in February as the shorter month typically results in lower inflows. “This pattern has been consistent over the past two to three years," he says pointing out that overall assets under SIPs still stands at a high Rs 12.38 trillion, which is only marginally down from Rs 13.2 trillion, and is primarily due to mark-to-market losses.
Also, according to the Amfi boss, in spite of the marginal fall, SIP assets as a percentage of the industry AUM still stays high at 19.6% in February.
Suranjana Borthakur of Mirae Asset Managers also feels there is no alarming trend as “the net inflows into SIPs though down, the drop is not significant and is partly due to February being a shorter month".
According to an MF distributor who wishes to not to be named, while there has been a noticeable increase in people pausing or deferring their SIPs, the biggest reason is that SIPs are now made through the direct route and there is no one to hand-hold an investor.
But he is hopeful of the declining trend getting reversed sooner than later. "We still get some inquiries, albeit fewer than before, but we always approach clients by linking SIPs with their long-term financial goals.”
Similarly Amol Joshi of Planrupee Investments, also is bullish of the times ahead saying investors are actively rotating between different scheme categories rather than exiting the market as SIP investment has been made so easy now and people are now shifting their portfolios from say flexi-caps or large-caps from small and mid-caps, and vice versa.
"Despite SIP stoppages, inflows are steady near Rs 26,000 crore. Since the rupee inflows remains stable, it's clear that investors are managing their portfolios more actively rather than exiting," he says adding technology is playing a key role in making portfolio adjustments easier.
"Earlier, setting up an SIP took 15 days to a month; now, it's done with a click. This has enabled investors to be more agile in portfolio management," he says.
Despite market volatility, there are no signs of large-scale investor exits. "SIP data remains stable, and while equity net inflows are slightly lower, they still come in excess of Rs 29,000 crore. This is not indicative of mass exits rather a minor dip," Joshi says.