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The US-China tariff wars caused market turmoil, spiking mutual fund SIP stoppage to 128% in March. Experts advise continuing SIPs for long-term wealth creation despite volatility.
Equity net inflow falls in March 2025
Mutual Fund: The long-term market turmoil with sharp ups and downs fuelled by the escalation of Tariff wars between the United States and China has dampened investors’ sentiment, leading to a sharp spike in the mutual fund SIP stoppage ratio to 128 per cent in March against 122.76 per cent in February.
The SIP Stoppage ratio indicates the difference between the number of discontinued SIPs compared to the number of newly registered SIPs. According to the data from the Association of Mutual Funds of India (AMFI), in March, the number of SIPs discontinued or completed was 51.55 lakh, while the number of new SIPs registered during the same period was 40.19 lakh. It reflected a difference of 11.36 lakh.
Is it the right approach to cancel or close your SIPs in mutual funds when the market is volatile?
“Investors have experienced volatility across various time periods for e.g. global financial crisis, dot com bubble, Covid,” said Manish Mehta, Joint President & National Head Sales, at Kotak Mutual Fund.
In hindsight, he added, “All these volatile periods have given an opportunity to investors to either start their investment journey or add to their existing investment to average their costs.”
**Should You Stop Or Continue Your SIP In MFs Amid Market Volatility?** Continuation of SIP is very important to a disciplined investment approach and key to long-term wealth creation for investors, argued Krishna Rao, Managing Director & Co-Head – Equity Broking, JM Financial Services Ltd.
“Thus, irrespective of market volatility, investors should continue with SIPs as the focus remains on medium-to-long term returns rather than timing the markets,” he added.
Rao believed that SIPs could be gradually increased when markets are bearish and overall valuation seems attractive as it helps to generate market-beating returns over the long-term.
Market Rebound After Volatile Period
“There is data to show that the market bounce back post any of the volatile periods mentioned has been sharp and helped an investor’s portfolio,” said Manish Mehta.
“When one starts an investment journey, it is keeping some goals in mind and mutual funds is an effective vehicle to help achieve those goals. If one sticks to the journey then only the goals can be achieved,” added Manish Mehta.
Experts are pressing the need to continue their SIPs to utilise the averaging out benefit. The market has seen several bumps in its history, which is part of its cycle.
