Despite an increase in systematic investment plan (SIPs) contributions, the stoppage ratio of SIPs, which stood at 52.3 per cent last year, has spiked to 109 per cent in January 2025.
Against 56.19 lakh new SIPs registered, 61.33 lakh were discontinued last month. This means more SIPs were discontinued in January 2025 than new ones started, reveals the latest Association of Mutual Funds in India (AMFI) data.
This is a stark departure from the trend seen in the past several months, if not longer. As the table below shows, new SIPs tend to surpass the ones that are discontinued during the same period, barring in January.
What experts say
Experts point out several reasons for the discontinuation of SIPs. One key reason is that investors are worried about a steep fall in the value of their investments.
“Retail investors are now worried because of the continuous share market fall. It is very difficult for common investors to see their portfolio bleeding daily. This leads to shaking up their confidence in an equity asset class whereas other asset classes like gold and debt are giving steady and superior returns,” says Preeti Zende, founder of Apna Dhan Financial Services.
Meanwhile, she says that stopping SIPs is not a good move for long-term investing, as investors miss out on rupee cost averaging.
“The new investors who have especially joined the equity market post-COVID never saw such deep correction and that’s why such investors now have started pausing their SIPs. But this is not a good step. If you are investing in equity mutual funds towards your long-term goals it is the best time to continue your SIPs to get more units in market correction. This helps you to increase portfolio value once the market starts recovering,” she adds.
Sridharan S, founder of Wealth Ladder Direct echoes the same sentiment.
“There are some investors, particularly HNIs, who have stopped their SIPs and diverted the money to the fixed income instruments such as FD to rebalance asset allocation. And there is another set of investors who are diverting their future SIPs to debt and fixed income instruments,” he says.
However, some underplay this by saying that total SIP contribution has risen in January.
“SIP cancellations happen for various reasons, including fund redemption due to reaching goal, switches and STPs. Thus, focusing solely on the stoppage ratio can be misleading. The net SIP inflows, which stood at ₹26,400 crore in January 2025, marked a 40.1% growth from ₹18,838 crore last year. This net inflow number is the main indicator when we are looking at SIPs, and despite a higher stoppage ratio, overall investor participation in SIPs remained strong. Also, most of these cancellations have started coming on direct mutual funds which depicts that investors who are invests on their own without laying down an investment strategy tends to get more jittery in such market scenarios,” says Feroze Azeez, Deputy CEO, Anand Rathi Wealth.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.