SIP inflows hit an all-time high, but rising cancellations raise red flags, shows report

Even as the mutual fund industry celebrates a new all-time high in systematic investment plan (SIP) inflows for June 2025, a closer look at the data reveals a simmering concern, an unusually high rate of SIP cancellations, which may hint at deeper issues of investor behaviour and retention.

According to the ‘SIP Trends & Insights–June 2025’ report by Geojit Investments Limited, the industry clocked gross SIP inflows of ₹27,269 crore in June 2025, a new record and the 15th consecutive month where inflows topped ₹20,000 crore. However, this bullish headline number may be hiding an uncomfortable truth: the SIP cancellation ratio remains elevated, hovering around 77.8%, close to the FY25 average.

“SIPs discontinued stood at 4.81 million, the fifth highest, resulting in a net SIP addition of 1.38 million... reversing the three-month trend noticed in January-March,” the report read. 

While it’s positive that June saw net additions return to the green, the volume of cancellations is still troublingly high. The cancelled-to-registered SIP ratio had breached the 100% mark earlier this year—109% in January 2025, 83% in December 2024, and 79% in November 2024, signalling more SIPs were being cancelled than added in those months.

“The current pace of SIPs getting cancelled versus registered is a concern. The recent numbers (except the January–April 2025 period) are higher than the FY24 and FY25 averages,” said Sriram B.K.R., senior investment strategist at Geojit Investments Limited. “SIPs getting stopped due to tenure completion could be one of the reasons. But them not getting restarted or extended is an issue. Since many investors have seen the real benefit and, in some cases, life-changing impact of SIPs, it is important that we continue with investor education and awareness to keep up a healthy new SIP enrolment and continuity momentum.”

This raises the possibility that the SIP boom may be fuelled by a rapidly revolving door of investors rather than a stable and growing base.

Additionally, the report noted that a one-time reconciliation exercise was conducted by Registrars and Transfer Agents (RTAs) and exchanges, following instructions from the Association of Mutual Funds in India and the regulatory authorities.

Who’s leaving and why?

There are multiple plausible explanations: short-term disappointment with market returns, especially in mid- and small-cap stocks, following the election. Increased SIP ticket sizes (₹2,966 on average, up 25.4% YoY) may have made contributions harder to sustain for some investors amid inflationary pressures. Fintech-led ease of entry may be enabling hasty entries, and just as hasty exits. Some industry observers worry that the retail investor influx may have been driven more by market momentum than long-term planning, say industry experts.

“Improvement and stability in contributing SIP accounts is a good sign. It reflects the true participation of investors across various SIP sizes. Historically, high-value SIPs—those above ₹10,000 or ₹15,000 per month—had a higher degree of stoppages or cancellations. That apart, we have seen an uptick in investors preferring to start SIPs at a slightly higher size than the usual ₹1,000-1,500 range. This is because they are becoming more conscious about their choices and the allocation of amounts for their goal planning,” said Sriram.

Despite the high cancellations, the ratio of contributing SIP accounts to total SIP accounts has improved intensely to 94.1% in June 2025, up from 73.3% in April 2024, the report noted. This suggests that even though many SIPs are being cancelled, a growing share of the remaining accounts are contributing.

To sustain the SIP growth story, experts suggest doubling down on investor education and handholding, especially for new-to-market users. “It is also crucial for mutual fund distributors and platforms to better match products with investor goals and risk appetite,” said Sriram.