There has been a clear shift in SIP investor preferences over the past five years.
According to the latest AMFI-Crisil Factbook, mid-cap funds replaced large-cap funds as the largest SIP category in March 2026, while small-cap, sectoral, and multi-cap funds also gained share.
Here are experts’ views on the shift and what investors should do.
Why did mid-cap funds overtake large caps?
Adil Chacko, Executive Director, Anand Rathi Wealth, attributed this to a sharp jump in mid-cap fund inflows. He said performance also supported the shift, with the Nifty Midcap 150 delivering around 17% annualised returns over five years, versus 9.1% for the Nifty 50.
“Hence, investors should ensure that such mid-cap exposure is driven by a long-term asset allocation strategy rather than simply chasing recent performance”, Chacko noted.
Aditya Agarwal, Co-Founder, Wealthy.in, pointed out that “large-cap SIP assets still grew 2.2 times to about ₹1.5 lakh crore. However, the overall SIP book grew 3.55 times, causing large-caps to lose six percentage points of share. Mid-caps grew at about 31% annually, helped by stronger returns, a wider universe after the IPO cycle, and better earnings growth”.
Why did multi-cap funds enter the top 10 SIP list?
Flexi-cap funds maintained a stable SIP share, at 13.1% in March 2021 and 12.8% in March 2026, while multi-cap funds entered the top 10 with a 4.1% share.
Chacko said, “Multi-cap funds offer mid- and small-cap exposure through a single fund, and investors can hold both flexi-cap and multi-cap funds as they follow different strategies.”
However, Agarwal observed that regulation was a key factor. “SEBI’s 2020 rule mandated 25% each in large, mid and small caps for multi-cap funds, while the new flexi-cap category led several schemes to migrate,” he said.
Are investors taking too much risk with small-cap funds?
Small-cap funds increased their SIP share from 8.3% to 12.1% between March 2021 and March 2026.
Chacko explained, “Inflows rose from ₹41,600 crore in FY25 to ₹51,800 crore in FY26, while the Nifty Smallcap 250 delivered around 14.5% annualised returns over five years. He suggested limiting small-cap exposure to 20%-25% of the equity portfolio.”
Agarwal cautioned that investors may be taking more risk than they realise. The Nifty Smallcap 250 trades at a P/E of around 34, 22% above its five-year median, while many investors who entered after 2020 have not experienced a prolonged small-cap downturn.
How did the sectoral funds SIP share change?
Sectoral and thematic funds increased their SIP share from 5.8% to 8.7%. Chacko attributed this to strong past performance in themes such as defence, auto, PSU banks and infrastructure.
Agarwal said sectoral and thematic funds grew 5.3 times, or 39.6% annually. But he highlighted a key warning: SIP penetration is only about 27% of assets, the lowest among major equity categories.
“This means this is largely lump-sum, NFO-timed money that typically arrives after a theme has already run,” he noted.
Chacko said, “The better way to get sector exposure is through diversified fund categories rather than concentrated sectoral and thematic bets”.
Why did hybrid funds lose their place in 2026?
Balanced hybrid/Aggressive hybrid funds fell out of the top 10 SIP categories in 2026. Chacko noted that “this may indicate that investors are taking greater control of asset allocation instead of leaving it to a single hybrid fund”.
Agarwal said, “The asset-allocation role shifted towards newer hybrid categories. Multi-asset funds received ₹0.7 lakh crore in FY26, the largest hybrid inflow, helped by the rally in gold and silver.”
What are the biggest mistakes investors are making?
Agarwal identified four key mistakes: “confusing the number of funds with diversification, chasing past returns, underestimating overall mid- and small-cap exposure, and failing to rebalance”.
Chacko’s crucial warning is against chasing recent performance through sectoral and thematic SIPs. Investors should check whether they have excessive thematic exposure and shift towards diversified categories where necessary.
What should new investors do?
According to Chacko, “the top 10 SIP categories in 2026 show where investors are allocating money today, but new investors should not simply replicate this category mix”.
Agarwal also added that “new investors should not replicate the mix as it reflects five years of past returns and combines SIP accounts across different ages and goals”.
Chacko suggested a broad equity allocation of 50%-55% to large caps, 20%-25% to mid caps, and the balance to small caps.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
About the Author
Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance.
She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends. This practical exposure strengthened her understanding of financial markets. She has also written content across multiple formats and platforms, including YouTube, LinkedIn, and Instagram.
Over time, she has developed expertise in covering market-linked stories, investor-focused topics, and regulatory updates in a simplified yet informative style. She also enjoys reading and listening to Hindi poetry, reflecting her appreciation for literature and creative expression beyond the world of markets and numbers.