Market slide pushes short-term SIP returns into negative territory

Mumbai: Systematic investment plans (SIPs), long marketed as a disciplined route to equity investing, are posting losses over shorter time frames amid the returns drought in the past 18 months.

Values of SIPs in equity mutual fund SIPs over one- and two-year periods have slipped into losses, according to ETIG. Average three-year SIP returns are below 5% across most equity categories - an outcome many investors, who started investing after Covid in 2020, are yet to encounter.

A 13% decline in the benchmark Nifty and a sharper sell-off in smaller shares over the past month since the start of the West Asia conflict has pushed equity mutual funds into losses. Returns from these products were already under pressure since September 2024 - the start of the reversal of the over four-year bull rally.

Across categories, one-year SIP returns in popular segments such as flexi-cap, mid-cap and small-cap funds are down 13.47%, 10.36% and 15.38%, respectively. Over two years, their values have fallen 5.2%, 3.34% and 7.78%, while three-year SIPs have delivered gains of 3.86%, 7.26% and 2.31%, respectively.

Mutual fund officials advice topping up their SIPs with lump sums of up to 10% in the wake of the market sell-off.

"The key is to continue to accumulate more units at such prices," says Swarup Mohanty, vice chairman and CEO, Mirae Asset Investment Managers (India).

Wealth managers said the risk-off backdrop warrants investments across asset classes.

"Investors who have randomly invested in SIPs should restructure their portfolios in line with their long-term goals and keep a mix of different asset classes like equity, debt or gold in their portfolios," says Harsh Chaturvedi, founder, Opulence Invest Services.