For the third straight month in March, more mutual fund SIPs were discontinued than newly registered.
According to the latest AMFI data released on Friday, about 51 lakh SIPs were stopped last month, while 40 lakh new registrations were recorded.
In March 2025 :
- SIP stoppage ratio reached 128.27%, a high.
- 51.55 lakh SIPs were stopped or matured.
- Only 40.19 lakh new SIPs were registered.
This means for evey 100 new SIPs, 128 were closed.
Previous months also showed rising trend:
- Feb 2025: 122% stoppage ratio
- Jan 2025: 109% stoppage ratio
This marks a three-month streak of net SIP erosion.
What Could Be Causing This Surge in SIP Closures?
Several interconnected reasons may explain this:
Market Volatility & Profit Booking
- Indian stock markets witnessed volatility and corrections in Q1 2025.
- Some investors may have booked profits after a strong 2023-24 bull run.
- Short-term investors often stop SIPs markets fall.
Personal Financial Pressure
- Rising inflation, EMIs, and cost-of-living pressures may have forced people to reprioritize expenses.
- SIPs being monthly auto-debits, are often first to go during liquidity crunches.
Portfolio Reshuffling
- Some investors may be closing older SIPs to shift to new funds, categories, or asset allocations.
- Switch from equity-heavy portfolios to debt or hybrid funds due to risk aversion.
What Are the Broader Market Implications?
- Investor Sentiment Weakening
- This stoppage ratio suggests rising nervousness, especially among retail investors.
- Challenges for AMCs
- Mutual Fund houses may see slower growth, especially in smaller towns where SIPs were driving penetration.
How Should Investors Interpret This?
Short-Term Panic vs Long-Term Wealth
- Historically, highest returns come from SIPs that continue through market corrections (due to rupee cost averaging)
- Stopping SIPs in panic often leads to sub-optimal returns.
Behavioral Investing Trap
- Stoppage at highs (to book profit) and restarting at market peaks (due to FOMO) hurts compounding
Need for Financial Discipline
- SIPs are meant for long-term wealth creation, not short-term timing.
Conclusion
- Retail investors are growing cautious.
- The market is entering a mature phase, where investors are becoming more reactive to external cues (elections, inflation, global markets)
- AMCs and advisors will need to focus more on investor education and goal-base investing to reduce such emotional exits.
