Investors exiting SIPs on the rise



Despite the relentless influx into mutual funds via a systematic investment plan over the past few months, the number of discontinued SIP accounts is also steadily increasing.

Interestingly, SIP accounts suspended or closed after their tenure at 9.25 lakh accounted for 40% of new 23.18 lakh SIP accounts opened in November.

While the new SIP accounts opened in November at 23.18 lakh were lower than the 23.83 lakhs opened in October, suspended SIP accounts fell from 8.50 lakh to 9.25 lakh during the same period.

In fact, in October, the number of interrupted SIPs at 8.50 lakh represented 36% of the 23.83 lakh new accounts opened. Some of the investors who had suspended their SIPs during the Covid outbreak last year are still waiting to re-enter the market with their monthly contribution.

Job losses

Himanshu Srivastava, associate director of Morningstar India, said many people who lost their jobs and livelihoods during the pandemic may take longer to reinvest in the stock market.

With job retention becoming increasingly uncertain, especially at the middle and upper levels, many investors now prefer to make lump sum investments rather than committing a certain amount on a monthly basis through a SIP, he said. he adds.

Most SIPs recorded by financial advisers are of a “perpetual” nature, as they indicate to investors that the contribution can be stopped at any time without any problems.

Umang Thaker, product manager, Motilal Oswal Asset Management Company, said many SIPs were shut down during the second wave of Covid and new registrations suffered. The number of new SIP accounts opened in April fell to 14 lakh from 16.7 lakh in March, and in terms of value, admissions fell by around 700 crore.

Although this is the eighth consecutive month of increasing trend in entries and new accounts opened, it cannot be assumed that all of the investors who gave up are back in the market. The closure of SIPs could either be due to profit recognition or be attributed to investors wary of the future and waiting for the “right” time to re-enter, he said.



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