Investors turn cautious on investing in MFs; closure of SIPs on the rise

One out of every three applications is for termination of plan as sentiment takes a hit

Investors are turning cautious on investing in mutual funds (MFs), as rising volatility in the market dampens sentiment. Besides a slowdown in equity inflows, closure of systematic investment plans (SIPs) is also on the rise. 

According to industry data, for every three SIP applications this fiscal year, at least one was for stopping the plan. In contrast, for the large part of the previous fiscal year, the ratio of fresh applications to closure requests was around five-to-one. 

The trend could be worrying given these monthly investment plans are widely seen as a strong structural driver for future growth of the Rs 25-trillion