Average one-year SIP returns now stand at 19.1 per cent for small-cap funds and 13.5 per cent for mid-cap funds, show data from Value Research. The rebound in SIP returns is particularly significant for small-cap and mid-cap funds, as a large portion of investments into the two retail-dominated categories comes through SIPs.
The market recovery and the sharp improvement in SIP and lump-sum returns come at a crucial time for the MF industry, which has been witnessing a moderation in key retail growth indicators. Monthly SIP inflows have declined for two consecutive months, falling from a record ₹32,087 crore in March to ₹30,954 crore in May. At the same time, SIP account closures outpaced new registrations in March and April, leading to a net decline of about 113,000 active SIP accounts over the two-month period.
The slump in performance and the uncertainty had slowed new investor additions to a three-year low in April.
According to MF officials, the industry’s growth, especially in segments linked to retail investors, will pick up as sentiment improves.
“An easing of global geopolitical friction and the subsequent recovery in the market are undoubtedly positive signals that reinforce investor sentiment. We certainly expect to see interest and momentum coming back into the market, which naturally reflects in positive movements across growth metrics, be it new investor additions, SIP registration numbers, or net inflows,” said Venkat Chalasani, chief executive, Association of Mutual Funds in India (Amfi).
Saugata Chatterjee, president and deputy chief executive officer, Nippon India MF, said that while near-term market conditions and geopolitical developments can temporarily influence investor behaviour and flows, the long-term trajectory of retail participation remains firmly intact.
“The improving trend in retail participation — reflected in consistent SIP inflows, rising assets under management, expanding folio base and strong SIP account additions — is closely linked to India’s structural growth trajectory. GDP is expected to remain strong at around 6.6 per cent in the financial year (FY) 2027, supported by domestic consumption tailwinds and increasing financialisation,” he said.
Apart from small-cap and mid-cap funds, one-year SIP returns have also turned healthy across categories such as multicap, multi-asset allocation and large-and-mid-cap funds. Large-cap funds, however, remain the lone exception, with average one-year SIP returns still in the red as of June 19.
The SIP return analysis is based on regular plan performance.