Mumbai: The ongoing stock market collapse has sapped mutual fund investor mood. Once the darling of ordinary investors, systematic investment plans (SIPs) have experienced a quick loss of gloss. The SIP statistics for January 2025 from the Association of Mutual Funds in India (AMFI) show 61.3 lakh SIP accounts redeemed against just 56.1 lakh SIPs registered. The SIP closures are surpassing fresh registrations for the first time in several months, indicating mounting investor tiredness.
The constant declining of stock prices is blamed for this shift since it left individual investors terrified and perplexed. It’s terrible for lapse-average investors to see their portfolio value declining daily,” said Mumbai financial analyst Rajesh Mehta. After this much volatility, equity as an asset class has lost appeal especially when alternatives like gold and debt instruments are yielding lower but consistent returns.
Pulled from the jaws of a pandemic, a bull run had attracted a flood of fresh investors into the stock markets, many of whom had profited handsomely on weighing markets. Now, though, the present give-in caught up with these rookies with a brutal reality check, and they are scrambling to withdraw from their sip in the panic of losing more. Mehta went on, ” Investors are of the view that they need to act now or the gains made the last four to five years could disappear completely.”
And this running away from SIPs is not one-time. SIP account closures have been gradually rising in the past few months, suggesting a wider decline in faith in equities. For many, the several unknowns about the market are sufficient; even the possibility of large returns is not enough. The need for safer assets—gold and fixed-income instruments, among others—has grown compelling.
Still, they are urging long-term investors to stay on target. According to wealth supervisor Priya Sharma, market corrections are actually the most effective period of time to retain SIPs since they let traders gather extra devices at declining value ranges. “This approach will surely provide much for your portfolio when the market recovers.”
Notwithstanding this advice, retail investors still seem fairly cautious. The attitude has evolved to save as much as we can, regardless of the opportunities of beefing up our life savings through a long-term commitment; this culture of protecting what we currently have leaves so little space for earning more.
Comments are closed.