SIPs start showing signs of weakness as closure ratio climbs to 66%

For every three accounts opened, two accounts were discontinued; industry officials say investors with shorter horizon quit on poor returns

Systematic investment plans or SIPs, which have cushioned the mutual fund (MF) industry amid volatility in equity flows, have begun to show signs of weakness. According to industry estimates, the SIP closure ratio, which is the number of discontinued SIPs as a percentage of new SIPs registered, rose to 66 per cent in August and September.

This meant that for every three SIP accounts opened, two SIP accounts were discontinued over the last two months.

According to industry officials, it is largely the weaker hands that have led to the spike in closure ratio. "Those who had entered markets with