ETMarkets.comThe calendar year 2025 has seen a surprising development in the mutual fund space with around 112 lakh net SIPs (Systematic Investment Plans) closed so far, which raises a question whether the investors should worry about the negative net SIP trend to which a market expert says that the decline in net new SIP registrations this year largely reflects cautious investor sentiment amid global volatility.
“The decline in net new SIP registrations this year largely reflects cautious investor sentiment amid global volatility. Events like the tariff changes announced by Trump earlier this year triggered some nervousness, leading to the liquidation of SIPs, particularly around April. However, this should not be a major concern, as we are already seeing signs of retail investors returning with renewed confidence as markets stabilise,” Shruti Jain, Chief Strategy Officer, Arihant Capital Markets shared with ETMutualFunds.
In the first six months of the current calendar year, only two months have witnessed net new SIPs registered whereas four months saw more of SIP closure. According to a report by Nomura, the net new SIPs registered in January were negative 5 lakh which indicates more of SIPs closed.
In February, March and April, around 10 lakh, 11 lakh, and nearly 116 lakh SIPs were closed, the report showed.
Systematic Investment Plan is always considered a disciplined and steady route for building wealth over time. With regular monthly contributions, SIPs help investors navigate market ups and downs through rupee cost averaging. However, the slowdown in SIP additions points to investors reacting to high valuations and bouts of volatility, Jain believes.
With more SIPs closed in the current calendar year so far, Jain firmly said that some may have exited due to subpar returns over the past year. “However, for long-term investors, this is precisely why SIPs are recommended—to navigate volatility through disciplined investing. It is advisable not to stop SIPs based on short-term market movements,” she added.
The mutual fund SIP stoppage ratio was recorded at 77.77% in June from 72.12% in May and 58.68% in June 2024 indicating that though more mutual fund SIPs were registered but the SIPs either stopped or their existing tenures ended have also increased, according to the data by Association of Mutual Funds in India (AMFI).
In April, the stoppage ratio was 297% as the number of SIPs stopped or discontinued were 136.99 lakh whereas the number of new SIPs registered in the same period stood at 46.01 lakh.
In January, February, and March, the SIP stoppage ratio was recorded at 109%, 122%, 128% respectively.
What is the SIP stoppage ratio?
The SIP stoppage ratio is the number of discontinued SIPs compared to the number of new registered SIPs. If this ratio crosses 100% then it indicates that more mutual fund SIPs are being stopped than the ones started.
However, one must keep in mind that stoppage ratio also includes those SIPs that have expired. Besides, investors may have simply switched from one SIP to another as part of their portfolio reshuffle.
As the SIP stoppage ratio was over 100% for four consecutive months, is it important for investors to monitor SIP stoppage ratio or registration trend when making long-term investment decisions to which Jain says that while SIP trends provide insight into overall retail participation and sentiment, they shouldn’t drive long-term investment decisions.
Market phases come and go, but consistent investing through SIPs ensures disciplined wealth creation over time therefore it's best to view such trends as temporary reactions to market events rather than signals to alter a long-term plan, Jain recommends.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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“The decline in net new SIP registrations this year largely reflects cautious investor sentiment amid global volatility. Events like the tariff changes announced by Trump earlier this year triggered some nervousness, leading to the liquidation of SIPs, particularly around April. However, this should not be a major concern, as we are already seeing signs of retail investors returning with renewed confidence as markets stabilise,” Shruti Jain, Chief Strategy Officer, Arihant Capital Markets shared with ETMutualFunds.
In the first six months of the current calendar year, only two months have witnessed net new SIPs registered whereas four months saw more of SIP closure. According to a report by Nomura, the net new SIPs registered in January were negative 5 lakh which indicates more of SIPs closed.
In February, March and April, around 10 lakh, 11 lakh, and nearly 116 lakh SIPs were closed, the report showed.
Systematic Investment Plan is always considered a disciplined and steady route for building wealth over time. With regular monthly contributions, SIPs help investors navigate market ups and downs through rupee cost averaging. However, the slowdown in SIP additions points to investors reacting to high valuations and bouts of volatility, Jain believes.
With more SIPs closed in the current calendar year so far, Jain firmly said that some may have exited due to subpar returns over the past year. “However, for long-term investors, this is precisely why SIPs are recommended—to navigate volatility through disciplined investing. It is advisable not to stop SIPs based on short-term market movements,” she added.
The mutual fund SIP stoppage ratio was recorded at 77.77% in June from 72.12% in May and 58.68% in June 2024 indicating that though more mutual fund SIPs were registered but the SIPs either stopped or their existing tenures ended have also increased, according to the data by Association of Mutual Funds in India (AMFI).
In April, the stoppage ratio was 297% as the number of SIPs stopped or discontinued were 136.99 lakh whereas the number of new SIPs registered in the same period stood at 46.01 lakh.
In January, February, and March, the SIP stoppage ratio was recorded at 109%, 122%, 128% respectively.
What is the SIP stoppage ratio?
The SIP stoppage ratio is the number of discontinued SIPs compared to the number of new registered SIPs. If this ratio crosses 100% then it indicates that more mutual fund SIPs are being stopped than the ones started.
However, one must keep in mind that stoppage ratio also includes those SIPs that have expired. Besides, investors may have simply switched from one SIP to another as part of their portfolio reshuffle.
As the SIP stoppage ratio was over 100% for four consecutive months, is it important for investors to monitor SIP stoppage ratio or registration trend when making long-term investment decisions to which Jain says that while SIP trends provide insight into overall retail participation and sentiment, they shouldn’t drive long-term investment decisions.
Market phases come and go, but consistent investing through SIPs ensures disciplined wealth creation over time therefore it's best to view such trends as temporary reactions to market events rather than signals to alter a long-term plan, Jain recommends.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
If you have any mutual fund queries, message on ET Mutual Funds on Facebook/Twitter. We will get it answered by our panel of experts. Do share your questions on ETMFqueries@timesinternet.in alongwith your age, risk profile, and Twitter handle.
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