SIP investors see short-term losses. Time to stay invested or review strategy?

Systematic investment plans (SIPs), widely promoted as a disciplined equity investing tool, have been generating negative returns in the short term amid a prolonged 18-month lull in market performance, as reported by ETBureau.

Over the past one- and two-year periods, SIP investments in equity mutual funds have slipped into losses, while average three-year SIP returns remain below 5% across most categories—an experience many investors who began investing after the 2020 Covid rally are facing for the first time.

A 13% decline in the benchmark Nifty and a sharper sell-off in smaller shares over the past month since the start of the West Asia conflict has pushed equity mutual funds into losses

Mutual fund experts advice topping up their SIPs with lump sums of up to 10% in the wake of the market sell-off. "The key is to continue to accumulate more units at such prices," says Swarup Mohanty, vice chairman and CEO, Mirae Asset Investment Managers (India).

Across categories, one-year SIP returns in popular segments such as flexi-cap, mid-cap and small-cap funds are down 13.47%, 10.36% and 15.38%, respectively. Over two years, their values have fallen 5.2%, 3.34% and 7.78%