SIP investors aren’t even flinching at market slump! Are you one of them?

Amid the ongoing market volatility and benchmark indices down by 6% in February, the mutual fund monthly SIP inflows have declined by just 2%, which the market experts believe that SIP numbers have remained strong and encouraging, while there was a marginal drop in February which was due to fewer days in the month; otherwise, it would have been on par with January.

"SIP numbers have remained strong and encouraging. While there was a marginal drop in February, this could be attributed to fewer days in the month; otherwise, it would have been on par with January," commented Anand Vardarajan, Chief Business Officer, Tata Asset Management.

Another expert shares similar opinion that the SIP inflows have come down, but the drop is not significant, partly due to February being a shorter month.


“The SIP inflows have come down, but the drop is not significant, partly due to February being a shorter month. I believe investors should continue their SIP flows as it is a great time to accumulate units," said Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India).

Also Read | RVNL, Infosys among top stocks bought and sold by MFs in February

According to a report by ET, the CIO of ICICI Prudential Mutual Fund, S Naren at a mutual fund distributor event in January end mentioned the risks of investing in expensive stocks even in a staggered fashion, among other issues, in a rare instance of an experienced industry insider spelling out the trigger warning explicitly.

“If an investor puts money into the wrong product through the popular Systematic Investment Plan (SIP) at the wrong time, it means trouble,” said S Naren. The report further highlighted that the CIO referred to the continued flows into equity schemes that bet on small-cap and mid-cap stocks - considered expensive even after the recent sell-off.

He further highlighted a few periods when SIPs as an investment plan would have lost money for investors and these included phases like 1994-2002 and 2006-2013 when SIPs in mid-caps would not have yielded any returns; on the contrary, the investment strategy eroded investor money.

According to Naren, the outlook for SIPs in such schemes looks unfavourable unless done for 20 years, which is a rarity. Currently, he recommends SIPs in large-cap, flexi-cap schemes or equity-oriented hybrid products.

The small cap mutual funds witnessed a decline of 35% from Rs 5,720 crore in January to Rs 3,722 crore in February. On a year on year, the inflows have surged by 27% from Rs 2,922 crore in February 2024.

Post a huge decline in inflows of small cap mutual funds on a monthly basis, the expert believes that the analysis of drop in SIP inflows into small and mid-cap funds suggests how the self-direction of the retail investor refrains from undertaking risk himself, especially during volatile periods in the market.

“At least these funds could be beneficial to an investor having a horizon of more than 15-20 years. However several investors panic at the very first sign of a return becoming negative and withdraw long-term plans. Getting onboard professional guidance with goal-based investing keeps portfolios much steadier,” Rajesh Minocha, a Certified Financial Planner (CFP) and founder of Financial Radiance mentioned.

“Besides, those who fear the highest of fluctuations might be best at flexi-cap funds where stock selection is left to professional fund managers,” he added.

The smallcap index - Nifty Smallcap 250 - is down by nearly 24% from its peak in September. The benchmark index - BSE Sensex - reached at a level of 74,029 on Wednesday against a level of 73,198 on February 28, 2025.

In the last three and six months, BSE Sensex has gone down by around 9% each. The index has gone down by 3.07% in the last nine months and by 4.50% in the last one month.

Also Read | HDFC AMC, other capital market stocks drop up to 3% post 26% decline in equity MF inflows

On a monthly basis, all equity categories have witnessed a decline in inflows except for focused funds which saw inflows surge by 64%, rising from Rs 783 crore in January to Rs 1,287 crore in February. An analyst believes that the consecutive 48 month of inflows reflects investors confidence.

According to Pankaj Shrestha, Head of Investment Services, PL capital, "In February 2025, equity net inflows declined by 26% to Rs 29,303 crore, marking a 10-month low. Despite this dip, the market has sustained positive inflows for 48 consecutive months, reflecting continued investor confidence. Notably, large-cap funds saw a slight decline but held up relatively better than other categories, indicating investors' preference for stability amid market volatility."

Commenting on how should investors’ proceed with their investments now, Minocha mentioned that investors should always make their decisions based on their own goals, risk appetite, and time horizon instead of these outside factors where they do not have any control.

“SIPs and STPs should definitely continue for investments, while those with a minimum five-year horizon could consider a partial lump-sum investment. Following a 14% correction in markets over the past five months, valuations are beginning to look interesting and present a good opportunity,” he explained.

“However, patience is necessary since the market can still have further declines as many geopolitical risks and weak domestic results still persist. It is wise to moderate further expectations on returns to a more realistic 11-13%, especially so for new investors, who have been used to very high returns after the pandemic,” he further advised.

A mutual fund expert also asks investors to continue investing through SIP. "With the structural growth story of the Indian economy remaining intact and India a bright spot in the global economy, we expect retail investors to continue investing through the SIP route," said Ashwini Kumar, Senior Vice President and Head Market Data, ICRA Analytics.

Note: One should always consider risk appetite, investment horizon, and goals before making any investment decisions.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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