All hell broke loose in February 2025 after ICICI Prudential Asset Management’s Executive Director and Chief Investment Officer Sankaran Naren told a closed group of mutual fund distributors (MFDs) at a conference in Chennai that valuations in small- and mid-cap stocks had reached absurd levels. He exhorted investors to withdraw from small- and mid-cap funds. But what caught everyone’s attention was his next comment where he asked investors to avoid investing in small- and mid-cap funds even through Systematic Investment Plans (SIPs). He said that if you had been investing in mid- and small-cap funds through SIPs in 2023 or later, your chances of getting poor returns were very high, unless you stayed invested for 20 years. That set us thinking: Do SIPs work?Elsewhere, investors are increasingly questioning the effectiveness of SIPs in today’s volatile markets. When markets are soaring, no one complains. Nearly 72 lakh new SIPs were registered in July 2024, as per figures put out by the industry’s trade body, Association of Mutual Funds of India (Amfi). In March 2025, just over 40 lakh new SIPs were registered. In June 2024, nearly 32.4 lakh SIPs stopped. In January 2025, 61.33 lakh SIPs were stopped. To be sure, this doesn’t necessarily indicate that investors withdrew in panic, though experts say panic stoppages have gone up. The SIP stoppage numbers indicate termination or their tenures were completed.
We decided to put SIPs to the test. Can investors really lose money through SIPs? And what’s the best way to make them work for you? To find out, we partnered with Crisil Intelligence—one of India’s largest research and rating firms—for an in-depth study. Together, we analysed SIP performance across tenures and equity schemes. Presenting the ET Wealth–Crisil Intelligence SIP Study.
ET Wealth-Crisil Intelligence SIP study 2025
Study covers seven key equity categories: Large-cap, mid-cap, small-cap, large & mid-cap, flexi-cap, multi-cap, and tax-saving (equity-linked savings) schemes.
- Only funds with a track record of at least 15 years were considered—110 in total.
- The analysis spans SIPs running between 31 March 2010 and 31 March 2025.
Mining the data
The study encompasses exclusively pure equity funds, where the majority of SIP investments are made. It covers seven key equity categories: large-cap, midcap, small-cap, large & mid-cap, flexi-cap, multi-cap, and tax-saving (equity-linked savings) schemes. Only funds with a track record of at least 15 years were considered— 110 in total. The analysis spans SIPs running between 31 March 2010 and 31 March 2025.While investors can start SIPs on any day, the study considered those that began at the start of each month. SIPs were evaluated across tenures ranging from 1 to 10 years. For each tenure, multiple rolling periods were analysed with a one-month shift. This means that for each SIP there were 169 instances for 1-year SIP, 157 for 2-year SIP, and so on, down to 61 instances for 10-year SIPs. The study focused on three key metrics: minimum returns (worst-case), maximum returns (best-case), and average SIP returns. Only growth option schemes were considered for this study.
VOLATILITY
As tenure goes up, volatility goes down
The ET Wealth–Crisil Intelligence SIP Study highlights the long-term nature of SIP returns. It analysed all equity funds (excluding passive, sectoral, thematic, and hybrid funds) that had completed at least 15 years, with 31 March 2010 as the cut-off date. The study shows that SIPs work—but they require patience.
How much is long-term?
Experts say that you must invest for the long-term. But how long is long-term? The study finds that SIPs across equity fund categories don’t result in losses if held for at least 10 years. That’s the point where returns consistently turn positive. Note, the study encompasses schemes across seven categories.
Large-cap funds start rewarding investors slightly earlier. The study shows that SIPs in large-cap funds don’t lose money if continued for at least nine years. Small- and mid-cap funds, being riskier, take about 10 years. “But there’s hardly any difference between SIPs in large-cap and small- or mid-cap funds, as both show similar risk trends over longer tenures,” says Piyush Gupta, Director -Consulting, Financial Services, Crisil Intelligence.
AVERAGE RETURNS
As tenures go up, SIP performance normalises
Multi-cap and flexi-cap funds give you results a bit faster, as per the study. If you hold a multi-cap fund for at least seven years or a flexi-cap fund for at least eight years, you don’t lose money. Remember: This is just a study based on a set of schemes for a definite period. Therefore, the break-even period (beyond which you don’t incur losses) is at best indicative. The actual needle would move up or down, depending on your entry and exit time.
D. Muthukrishnan, a Chennai-based mutual fund distributor, goes a step further. Known in the MF circles for advocating long-term SIPs, he says that 10 years should be the minimum, not maximum, time frame that investors should run their SIPs. Your SIP should last at least one full business cycle, not just an equity market cycle,” says Muthukrishnan.
Can you lose money in a SIP?
All 7 equity categories
SIP is not a magic wand, and can deliver negative returns in short to medium terms.
SMALL- AND MIDCAPS
While small-cap funds are more volatile, over time their wild swings calm down.
LARGE CAPS
Study shows that large-cap SIPs don’t lose money if continued for at least 9 years.
Short-term can be volatile
Although equity funds pay off well if you are a patient investor and hold on for longer tenures, they can be highly volatile in the short term. Consider this. Over 1-year, 2-year and 3-year SIPs, the lowest returns across funds was -33.80%, -8.80% and -3.80%, respectively. The best-performing SIP return across all funds over these periods was 174.20%, 129.40% and 74.90%, respectively. The variance comes down as the tenure goes up.
SIPs need time
That’s the big issue. However, the reality is that although equities outperform all other asset classes over time, there is no guarantee of returns.
But the probability of losses goes down as time goes by. Of the 18,590 1-year SIP returns we analysed, funds lost money 24.94% of the time. This figure dropped to 9.73 % for 2-year SIPs, 3% for 3-year SIPs, and 1.09% for 4-year SIPs. Put it simply, the probability of losing money in a SIP goes down as the time horizon goes up.
Not losing money is not enough. Investors expect good returns as well. The probability of getting more than 10% returns is more than 80% for tenures of five years or more. The probability of getting more than 10% SIP returns is 89.1% for 10-year SIPs. The probability of getting more than 15% SIP returns on a 10-year tenure is 45.3% and more than 20% is 8.4%. On average, 10-year SIPs deliver returns of 14.6%.
Can SIPs give meaningful returns?
% of times SIP returns were greater than 10%
Just because a mutual fund scheme doesn’t give a negative return, doesn’t mean it has worked. It is reasonable to expect the fund to give an adequate return. Here, we have assumed it to be 10%. It takes at least five years for SIPs to stand a 80% chance or better to earn that return.
