For investors who stay with their mutual fund SIPs through market ups and downs, time can make a significant difference to the eventual corpus. A decade of regular investing can allow returns to compound across different market cycles, although not every fund is able to sustain strong performance for that long.
An analysis of Value Research data shows that 16 schemes delivered annualised SIP returns of more than 20% over the past 10 years.
Nippon India Small Cap Fund led the pack with a 22.51% 10-year SIP return. A ₹10,000 monthly SIP in the fund over the period would have grown to about ₹38.8 lakh, against a total investment of ₹12 lakh.
What stands out, however, is that the 10-year leaders were spread across different investment strategies. Small-cap and mid-cap funds featured prominently, but the list also included gold, infrastructure, healthcare, multi-asset and ELSS funds.
Small-cap, mid-cap funds dominate the long-term winners
Nippon India Small Cap Fund was followed by Bank of India Manufacturing & Infrastructure Fund and Quant Multi Asset Allocation Fund, with 10-year SIP returns of 22.10% and 22.02%, respectively. Invesco India Mid Cap Fund was close behind at 21.95%.
7 of the 16 funds were small-cap or mid-cap funds. The remaining nine came from infrastructure, healthcare, ELSS and multi-asset categories.
The long-term numbers, therefore, tell a story of sustained compounding rather than a single market rally. But the picture changes considerably when the analysis is narrowed to the past year.
One-year leaders are riding a different market trend
The latest one-year SIP performance is heavily tilted towards small-cap funds. Bank of India Small Cap Fund topped the broader one-year list with a 52.89% return, followed by ITI Small Cap Fund at 44.21% and Union Small Cap Fund at 43.17%.
SBI Healthcare Opportunities Fund was the strongest non-small-cap fund near the top, with a 40.66% return. Mahindra Manulife Small Cap Fund delivered 37.91%, while UTI Healthcare Fund and HSBC Midcap Fund returned 37.19% and 36.04%, respectively.
Several small-cap funds, including Invesco India Small Cap Fund and Sundaram Small Cap Fund, also featured among the stronger one-year performers.
This is where the difference between short- and long-term rankings becomes important. For instance, Quant Multi Asset Allocation Fund, the third-highest 10-year performer, delivered 11.33% over one year.
Similarly, ICICI Prudential Infrastructure Fund posted a 20.93% 10-year SIP return but just 6.55% over one year.
The divergence underscores why investors should be careful about extrapolating recent returns. A one-year performance number can reflect the fortunes of a particular market segment or theme, while a decade-long SIP return captures the effect of staying invested across multiple market conditions.