Alarm bell for SIP investors: 61.33 lakh SIPs closed

Even though people investing in mutual funds are continuously contributing through Systematic Investment Plans (SIPs), the rate of SIP closures has seen a huge jump. According to the latest data from the Association of Mutual Funds in India (AMFI), the rate of SIP closures has reached 109% in January 2025. Last year this rate was 52.3%.

56.19 lakh new SIPs were started in January 2025, while 61.33 lakh SIPs were closed. This means that more SIPs were closed than new SIPs, which is a worrying sign. In the previous months, the number of new SIPs was more than the closed SIPs, but this trend changed completely in January.

Expert Opinion

Experts believe that the main reason for the closure of SIPs is the growing concern of investors about the fall in the market. Preeti Zende, founder of Apna Dhan Financial Services, says, “Retail investors are panicking seeing the continuous fall in the stock market. When the value of the portfolio is seen falling every day, it becomes difficult for common investors to bear it. This reduces their confidence and they start retreating from the equity asset class, while other asset classes like gold and debt funds are giving stable and better returns.” However, experts do not consider closing SIPs a right step. Zende further says, “The new investors who have come into the market after COVID have never seen such a huge decline, so they are now stopping SIPs. But this is not the right step. If you are investing in equity mutual funds for your long-term goals, then it would be wise to continue SIPs during this decline. This will increase the value of your portfolio when the market improves.” Therefore, experts say that it would be better to continue investing in the current market so that more units can be bought during the decline and more profit can be obtained when the market recovers.