India’s Systematic Investment Plan (SIP) ecosystem continues to expand, but a growing number of investors are failing to stay invested for the long term. Industry data shows that while the total number of SIP accounts has increased steadily, only around one in every 10 SIP accounts has remained active for more than five years. Experts say the trend reflects changing investor behaviour, particularly among younger investors who are more likely to discontinue their investments during periods of market volatility.
According to the latest data, the number of SIP accounts that continued for more than five years declined by 11.2% year-on-year, falling to 1.06 crore in March 2026 from 1.19 crore a year earlier. During the same period, however, the country’s overall SIP account base increased by 3.9%, rising to 10.45 crore from 10.05 crore, indicating that new investors continue to enter the mutual fund market even as long-term retention weakens.
A similar trend has been observed in Gujarat.
The sharpest decline was recorded in direct-plan SIP accounts, which dropped 34.7% to 17.55 lakh in March 2026 from 26.87 lakh a year earlier. Regular-plan SIP accounts also declined, though at a much slower pace, falling 4.4% to 88.44 lakh from 92.51 lakh.
Parth Parekh, Head of Investor Relations at a leading mutual fund distribution company, said the divergence suggests that investors managing their own portfolios are more likely to discontinue SIPs when markets underperform.
“A section of direct investors selects funds based on recent one- or three-year returns. When performance moderates, they either stop their SIPs or switch schemes,” Parekh said. He added that investors who work with distributors receive guidance on asset allocation, risk profiling and behavioural coaching, helping them stay invested through volatile market conditions.
Mumukshu Desai, Director of a financial advisory firm in Ahmedabad, said the trend does not indicate weakening interest in mutual funds, as the overall value of SIP investments continues to rise. Instead, it points to investors struggling to sustain SIP investments beyond five years.
Desai attributed the pattern partly to the rapid growth of do-it-yourself investment platforms, which have made mutual funds more accessible, particularly for younger investors. While these platforms have broadened participation, they have also resulted in many investors making investment decisions without professional guidance.
According to Desai, many younger investors are experiencing a prolonged phase of market volatility for the first time and are therefore more likely to discontinue SIPs or redeem investments during market corrections. He also noted that investors frequently restructure their portfolios by shifting to better-performing schemes or newly launched funds, often reacting to short-term performance rather than focusing on long-term investment fundamentals.
Industry participants also believe that several practical factors contribute to mature SIPs being discontinued. These include cash-flow pressures, investors achieving their financial goals, mandate expirations, and portfolio consolidation.
The data highlights a significant challenge for the mutual fund industry. Although SIP participation continues to grow and fresh investors are entering the market, maintaining long-term investment discipline remains difficult. With SIP accounts older than five years accounting for just 10.1% of the country’s 10.45 crore SIP accounts, the figures underscore the challenge of keeping investors committed throughout an entire market cycle despite the continued expansion of India’s mutual fund investor base.
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