SIP Stoppage Ratio Hits Record 122% in February: What It Means for Investors
SIP Stoppage Ratio : The Systematic Investment Plan (SIP) stoppage ratio surged to an all-time high of 122% in February 2025, indicating a sharp increase in the number of discontinued or expired SIPs compared to new registrations. This alarming rise signals a shift in investor sentiment amid market volatility.
Understanding the SIP Stoppage Ratio
The SIP stoppage ratio reflects the percentage of SIPs that have been discontinued or expired in a given month relative to the number of newly registered SIPs. In simple terms, if the ratio is above 100%, it means more SIPs are being stopped than started.
Here’s a look at the recent trend:
| Month | SIP Stoppage Ratio |
|---|---|
| December 2024 | 83% |
| January 2025 | 109% |
| February 2025 | 122% |
The data from the Association of Mutual Funds in India (AMFI) suggests that the trend has been worsening over the past few months, with stoppage rates climbing significantly from 83% in December to 122% in February.
Key Financial Data from February 2025
| Metric | Value |
|---|---|
| SIP Inflows | ₹25,999 crore |
| SIP Inflows (January) | ₹26,400 crore |
| Active SIP Accounts | 44.56 lakh |
| Discontinued SIP Accounts | 54.70 lakh |
| Total Assets Under SIP | ₹12.38 lakh crore (down from ₹13.2 lakh crore) |
Why Are Investors Stopping SIPs?
- Market Volatility: The past six months have seen a downturn in both Nifty 50 (-11%) and BSE Sensex (-10%), causing investors to panic.
- Portfolio Reshuffling: Investors are shifting funds between different schemes rather than completely exiting the market.
- Lack of Guidance: Direct investors without financial advisors are more likely to stop their SIPs during uncertain times.
- Seasonal Trend: February typically sees a dip in SIP numbers due to the shorter month, impacting inflows.
Expert Opinions on the SIP Trend
Market Recovery Could Reverse Trend
Pravin Kulkarni, Founder of UPInvest, acknowledges the rising stoppage ratio but believes the trend will reverse once markets recover. He emphasizes that investors with long-term financial goals should stay invested despite volatility.
Adjustment, Not an Exit from the Market
Amol Joshi, Founder of PlanRupee Investment Services, believes that investors are shifting rather than exiting the market. Many are moving from mid-cap and small-cap funds to large-cap or balanced advantage funds, ensuring stable inflows.
Technical Adjustments in AMFI Data
Venkat Chalasani, CEO of AMFI, explains that part of the increase in discontinued accounts is due to adjustments from January, as some accounts closed under SEBI guidelines were only accounted for in February.
The Role of Technology in SIP Management
With advancements in financial technology, setting up or pausing an SIP has become easier than ever. Earlier, setting up an SIP took 15-30 days, but now investors can do it with just a few clicks, making portfolio adjustments more frequent.
Should You Stop Your SIP During Market Downturns?
Most financial experts advise against stopping SIPs based on short-term volatility. SIPs work best when continued during market downturns, as investors accumulate more units at lower prices, benefiting from rupee cost averaging in the long run.
Conclusion
While the 122% SIP stoppage ratio in February may seem alarming, the broader SIP inflows remain stable at around ₹26,000 crore. Many investors are not exiting but rather adjusting their portfolios. For long-term wealth creation, staying invested and continuing SIPs is crucial.
FAQs on the SIP Stoppage Trend
1. What does a SIP stoppage ratio of 122% mean?
It means that for every 100 new SIPs registered, 122 SIPs were discontinued or expired, leading to a net decrease in active SIPs.
2. Why did the SIP stoppage ratio increase in February?
The increase is due to market volatility, portfolio reshuffling, seasonal trends, and technical adjustments in AMFI data.
3. Should I stop my SIP if the market is down?
No. Market downturns are the best time to continue SIPs since you buy more units at lower prices, maximizing long-term gains.
4. Are investors exiting mutual funds?
No, most investors are rotating between different schemes rather than exiting the market entirely.
5. How does technology impact SIP investments?
Technology makes it easier to start, pause, or modify SIPs quickly, leading to more frequent portfolio adjustments.
By understanding the bigger picture, investors can make informed decisions and avoid knee-jerk reactions to short-term market movements.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.