Monthly net inflows through SIPs might have reached another record in May at Rs 20,904 crore – marking the 11th consecutive month of a new high – but the SIP stoppage ratio has also hit an all-time high, raising concerns among industry players.
According to the latest data from the Association of Mutual Funds in India (AMFI), 49.74 lakh new SIP accounts were registered in May, down from 63.65 lakh the previous month. Furthermore, discontinuations increased by 32.21 percent to 43.96 lakh from 33.25 lakh in the prior month. Consequently, the ratio of SIPs stopped as a percentage of fresh SIPs registered – known as the SIP stoppage or closure ratio in industry terms – stood at 88.38 percent in May.
This figure surpasses the previous high of 80.69 percent set in May 2020. The ratio, which measures the number of SIPs discontinued or expired as a percentage of fresh SIPs registered, has hit new highs amidst both new SIP registrations and discontinuations in April and May.
Interestingly, even though the number of new SIP registrations is increasing, the rate of increase is slower than in previous months, driven largely by new fund offerings. For instance, an NFO by HDFC – Manufacturing Fund – collected around Rs 9,500 crore, including a significant commitment through SIPs.
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