SIP investors not reacting to short-term fluctuations, says Amfi chief

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India’s mutual fund investors are showing remarkable resilience amid global volatility and uncertainty, Venkat Nageswar Chalasani, chief executive of Association of Mutual Funds of India (Amfi), told Mint in an interview.

Despite geopolitical tensions, foreign portfolio investment outflows, and inflation, inflows into systematic investment plans remain strong at ₹30,000 crore per month. But with stoppage ratios spiking, is the road ahead getting tougher?

Chalasani seemed confident that investor confidence is back as the trend reversed in May, with new SIP (Systematic Investment Plan) registrations once again outpacing closures. Edited excerpts:

The most pressing challenge at present is navigating an environment of heightened market volatility and persistent global uncertainty. Several macroeconomic and geopolitical factors are contributing to this, including geopolitical tensions, FPI outflows, elevated inflation, relatively high interest rates, uncertainty about AI-driven market trends, and the narrowing interest-rate differential between the US and India.

These developments have created short-term fluctuations in the markets, which can understandably influence investor sentiment. At Amfi, our continued focus is on reinforcing the importance of long-term investing through sustained financial literacy and investor awareness initiatives. Our priority is to ensure that investors remain informed, avoid making decisions based on short-term market movements, and stay focused on their long-term financial goals.

Investors have, by and large, demonstrated remarkable resilience in the face of the current uncertainty. The most encouraging indicator is the continued strength of SIP inflows. Mutual funds are consistently receiving around ₹30,000 crore every month through SIPs, reflecting investors' confidence in the long-term prospects of the Indian economy and capital markets.

This resilience is the result of sustained investor education and continuous engagement by asset management companies (AMCs), distributors, and Amfi. Over the years, investors have increasingly understood the importance of staying invested through market cycles and have embraced disciplined, goal-based investing rather than reacting to short-term market movements.

We remain highly optimistic about India's long-term growth trajectory and the opportunities it presents for wealth creation. While short-term challenges and periods of market volatility are inevitable, they do not alter the underlying structural strengths of the economy.

Broadly, mutual fund investors fall into two categories: those who invest through lump-sum allocations and those who invest regularly through SIPs.

We are observing that the approximately 95 million SIP accounts, contributing an average of ₹3,000 per account, have remained largely stable. Although both March and April recorded more SIP account closures than new registrations, resulting in stoppage ratios exceeding 100%, the trend reversed in May, with new SIP registrations once again outpacing closures.

More importantly, it is the composition of these closures that warrants attention. A higher stoppage ratio does not necessarily indicate investor disenchantment. Some investors may have achieved their financial objectives and therefore discontinued their SIPs. Others may have paused investments to reassess their portfolio strategy. For example, investors may have shifted from category-specific schemes to flexi-cap funds, where fund managers have the flexibility to allocate capital across large-, mid-, and small-cap stocks. In such cases, investors may close an existing SIP before initiating investments in a different scheme.

Overall, SIP investors have demonstrated considerable resilience.

Through our investor awareness and education programmes, we consistently communicate the benefits of disciplined investing, particularly during market cor...