Increase in SIP Stoppage Ratio

The number of investors stopping their SIPs has been increasing in recent months. The SIP stoppage ratio, which measures the number of people discontinuing their SIPs, has doubled from 50-55% last year to 109% in January 2025.

One key reason for this rise in SIP closures is high market volatility. Global economic uncertainties, geopolitical tensions, and inflation have made investors cautious. Many are moving their money to safer investment options like gold and fixed-income securities instead of continuing with SIPs.

As a result, the number of active SIP accounts has dropped. In January, the total number of outstanding SIP accounts fell to 10.27 crore from 10.32 crore in December. At the same time, SIP closures jumped from 37 lakh to 45 lakh.

Despite this, the overall inflow into SIPs remains strong. In 2024, SIP investments have totaled ₹2.37 lakh crore, which is 19% higher than last year’s inflow. This suggests that while some investors are exiting, many others are still committed to SIPs.

However, returns from small-cap funds have been disappointing. Several small-cap funds have delivered negative returns over the past year, causing concerns among investors. Three funds even recorded losses of more than 20% on SIP investments. The Quant Small Cap Fund reported a negative XIRR of 22% over the past year, while Axis Small Cap Fund and Quantum Small Cap Fund both saw losses of around 8%.

Given these trends, investor sentiment is shifting. Instead of chasing profits, many are now focusing on protecting their gains.