The Indian mutual fund industry witnessed a rise in SIP (Systematic Investment Plan) discontinuations in February 2025, reflecting growing investor caution amid market fluctuations. The SIP stoppage ratio increased to 122%, up from 109% in January 2025, indicating that more investors opted to stop their SIP contributions rather than start new ones.
Stoppage Ratio is a percentage of number SIPs discontinued/tenure completed divided by new SIPs registered.
According to data from the Association of Mutual Funds in India (AMFI), while 44.56 lakh new SIP accounts were opened in February, around 54.70 lakh SIPs were discontinued, leading to a decline in active SIPs. However, the increase in discontinued account is also attributed to reconciliation with exchanges and RTAs pertaining to 2024, which is around 12-15 lakh accounts for the month of February. The number of contributing SIP accounts also dropped from 8.34 crore in January to 8.26 crore in February. The increase in SIP stoppages directly impacted collections, which fell to Rs 25,999 crore in February, down from Rs 26,400 crore in January 2025. This decline suggests that investors are becoming more cautious, potentially due to market volatility and concerns over economic conditions.
Adding to the worries, equity net inflows fell to Rs 29,303.34 crore in February 2025 against Rs 39,688 crore in January 2025. The debt fund segment also saw significant movement, with net outflows of Rs 6,525.56 crore in February, reversing the massive Rs 1,28,652.58 crore net inflows recorded in January.
While the surge in SIP stoppages and the decline in net inflows raise concerns, industry experts believe that market sentiment could improve in the coming months. Many advisors emphasize the importance of staying invested in SIPs through market cycles rather than reacting to short-term volatility.