A well-balanced combination of active and passive funds can work effectively
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Notwithstanding the highest-ever inflow of ₹32,297 crore through SIP in August, most of the equity funds have delivered single-digit returns in last three years.
The overall inflows through SIP at ₹1.58 lakh crore in the last 5 months have touched 45 per cent of last fiscal inflow of ₹3.50 lakh crore.
In fact, except for the average SIP return of 13 per cent each from small and mid-cap funds, all the schemes have delivered a single- digit return on the back of healthy investors interest, according to the data sourced from Geojit Research.
The large and value funds were the least performers with the average SIP returns of 5 per cent and 7 per cent in three years, while the returns from flexi and large and mid-cap were at 8 per cent and 9 per cent respectively.
strong inflows
However, over last one year, small and mid-cap funds have delivered a return of 28 per cent and 18 per cent, largely on the back of strong inflows in these schemes.
Aditya Agarwal, CFA, Chief Investment Officer at Avisa Wealth Creators, said SIP growth remains steady despite modest 1–3 year returns because investors increasingly view SIPs as a disciplined, long-term wealth-creation tool rather than a short-term return strategy.
Volatility does not automatically increase risk; regular investing enables rupee-cost averaging, though excessive exposure to mid- and small-cap funds should be avoided, he said.
A well-balanced combination of active and passive funds can work effectively — active funds forming the core portfolio, while passive funds serve as satellite allocations for low-cost and targeted market exposure, said Agarwal.
Yudhajit Baul, Founder, Yudhajit Financial Services, said despite the headwinds of geopolitics, sub-par monsoon and high crude oil prices, earnings growth are expected to be strong in September quarter.
The increase in SIP flows amid volatile markets talks volumes about the growing maturity of the retail investors, he said.
Despite the low returns in equity mutual funds in the last 2 years, their confidence on the potential of Indian equities to compound their wealth and help them achieve their financial goals, has only been bolstered, he added.
systematic approach
Sriram BKR, Senior Investment Strategist, Geojit Financial Services, said the systematic approach of investing in volatile asset like equities and taking smaller steps for long-term goals have gone a long way in shaping the investors behaviour in the recent volatile and low-return environment.
However, he added equity is a high risk asset leading to extended periods of drawdowns and it is very important to continue with SIP through the low return periods.
Published on September 16, 2026