Rise in SIP Discontinuations: Why Investors Are Cautious

The Indian mutual fund industry is seeing a sharp rise in SIP (Systematic Investment Plan) discontinuations, showing that investors are becoming more careful. In February 2025, for every 100 new SIPs started, 122 were stopped or left inactive—the highest rate ever recorded. This is a big jump from 109% in January and 83% in December, according to data from the Association of Mutual Funds in India (AMFI).

Why Are Investors Stopping SIPs?

Though SIP investments slightly dropped to ₹25,999 crore in February from ₹26,400 crore in January, the number of active SIP accounts fell to 44.56 lakh, while discontinued accounts rose to 54.70 lakh.

Experts say many SIP investors, especially those who invest without financial advisors, tend to pause or stop their investments when the stock market is down.

Pravin Kulkarni, founder of UPInvest, believes this trend may reverse when market conditions improve. He said, “We are helping clients focus on long-term goals so they don’t panic during market ups and downs.”

Stock Market’s Role in SIP Trends

The recent stock market decline has made investors nervous. In the past six months, the Nifty 50 and BSE Sensex have fallen by 11% and 10%, affecting investor confidence.

However, AMFI CEO Venkat Chalasani clarified that the high SIP stoppage ratio is not just because of market changes. He explained that February’s numbers include account clean-ups from January and closures required by SEBI rules.

Are Investors Leaving or Just Shifting?

Despite more SIPs being discontinued, many investors are not leaving the market completely—they are just shifting their money to different types of mutual funds.

Amol Joshi, founder of PlanRupee Investment Services, says investors are moving from mid and small-cap funds to large-cap or flexi-cap funds. Others are choosing balanced advantage funds to reduce risk.

Joshi also noted that technology is making it easier for investors to adjust their portfolios, allowing them to switch funds quickly instead of completely stopping investments.

SIP Investments Still Strong

Despite these changes, financial experts say that long-term investors don’t stop SIPs due to short-term market dips.

“SIP investments are for long-term goals, not short-term market trends,” Joshi said. “If someone is investing for 2030, they won’t stop just because of a temporary market fall.”

Even with more SIP discontinuations, mutual funds are still attracting strong investments. In February, equity mutual fund inflows crossed ₹29,000 crore, showing that overall confidence in mutual funds remains strong.

Final Thought

While some investors are pausing or shifting SIPs, mutual funds continue to receive steady investments. Financial experts advise investors to stay focused on long-term goals and avoid reacting to short-term market changes.

Disclaimer: This article is for informational purposes only and is not financial advice. Always research and consult a financial advisor before making investment decisions