InvestorQ : I read a report that SIP discontinuation ratio had come down for mutual funds in May? What does that mean and is it positive?
Rutuja Nigam made post

I read a report that SIP discontinuation ratio had come down for mutual funds in May? What does that mean and is it positive?

Answer
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6 months ago
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In absolute terms, the number of SIPs discontinued in May 2021 fell to 6.6 lakhs compared to around 8 lakhs in the past few months. It is the number of SIPs that do not get renewed or are terminated by the investors for various reasons. During May 2021, the equity funds saw inflows of Rs.10,083 crore while SIP inflows were Rs.8,820 crore.

In the last 3-4 years, most SIPs gave CAGR returns of 13-14%, making it an attractive proposition. However, one major apprehension still remains as to what happens to these SIPs once the market corrects. In the past it has been observed that sharp fall in indices leads to spike in SIP closures.

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