SIP closure ratio surges to 51% in 2022 from 41% in 2021: Amfi data

In 2022, the growth in discontinuation of systematic investment plans (SIPs) outpaced SIP account registrations.

Until end-November, 23 million new SIP accounts were registered, compared with 22 million during the same period in 2021 - a growth of 6 per cent.

However, discontinuations rose 30 per cent during the same period, from 9 million to 12 million, reveals data from the Association of Mutual Funds in India (Amfi).

As a result, the ratio of SIPs stopped as a percentage of fresh SIPs registered (SIP stoppage or closure ratio) jumped to 51 per cent in 2022, from 41 per cent in 2021.

The lower the SIP closure ratio, the better it is, as it indicates higher retention of SIP investors.

Redemptions from mutual funds (MFs) have been on the higher side in the latter half of 2022. In November, redemptions from equity MFs rose 60 per cent month-on-month to Rs 26,030 crore - the highest since September 2021.

The surge in redemptions brought down net investments in active equity schemes to Rs 2,260 crore in November - the lowest since February 2021.

N S Venkatesh, chief executive officer, Amfi, said the surge in redemptions was due to profit-booking by investors.

“There have been outflows from retail schemes as people are encashing profits due to increased consumption during the festival season,” he said.