SIPs start showing signs of weakness as closure ratio climbs to 61% in Dec

Systematic investment plans or SIPs have seen a spike in the closure ratio in December. The ratio — which is SIPs discontinued as a share of new SIPs — stood at 61.4 per cent for the month. This is a 10-percentage point rise from November’s ratio of 51 per cent. 

At 591,000, December saw the highest number of SIPs being discontinued in the current financial year, while 962,000 was the number of new SIPs registered in the month. According to mutual fund industry participants, the rise in the closure of SIPs has been on account of investors pulling out investments to cash in on the market rally seen in the last few months. In the past five months — boosted by the corporation tax cut — the BSE Sensex has posted gains of over 11 per cent, touching fresh lifetime highs. 

However, the contribution through SIPs remained intact with the industry seeing SIP flows at Rs8,518 crore in December, which was one per cent higher than the previous month. 

The number of SIPs at  December-end stood at 29.7 million.

Source: Amfi