Investing in SIPs for 12–15 months but returns still zero? Here’s what you’re doing wrong and how to fix it

Investing in mutual funds through Systematic Investment Plans (SIPs) has become one of the most popular ways to build wealth in India. The number of SIP accounts continues to rise every month. However, in the past year, many investors have started feeling disappointed with their SIP performance.

On social media, many investors have shared that even after investing regularly for 12 to 15 months, their portfolios are either showing negative returns or no growth at all. Many are now wondering what went wrong and what they should do next.

A closer look at one-year returns confirms these concerns. In the equity mutual fund category, at least 60 schemes have delivered negative returns in the past year. Many others have shown only marginal growth — between 0% and 1%.

This means lakhs of investors are seeing little to no growth — and in some cases, even losses — in their SIP portfolios. Naturally, this brings up an important question: what should investors do now?

More importantly, how can you get your SIP portfolio back on track and start earning better returns again? Understanding common mistakes SIP investors make and knowing how to improve SIP performance can help you navigate tough market phases with more confidence.

Here’s a closer look at what might be going wrong — and the smart steps you can take to realign your investments with your long-term financial goals.

Why does growth in SIP portfolios turn flat or negative?

The primary reason behind flat or negative SIP portfolios lies in the prolonged volatility of the stock market. Since September 2024, markets have been witnessing continuous ups and downs. Even as 2025 nears its end, there is still no clear direction or stability in sight.

A major contributing factor has been the global trade and tariff wars, which have disrupted investor sentiment across markets. In addition, geopolitical tensions in different parts of the world have further fuelled uncertainty, making equity markets highly unpredictable.

This instability has directly impacted mutual fund SIP portfolios, as equity-linked schemes generally mirror broader market movements. As a result, many investors have seen their portfolios stagnate or even slip into negative territory, causing frustration and concern about their investment journey.

In such times, it becomes crucial to understand the reasons behind this volatility and how it affects long-term SIP returns. A clear understanding helps investors make rational, not emotional, investment decisions.

Is it fair to judge SIP performance based on just one year?

Looking at one-year SIP returns can often paint an incomplete picture of your investment’s true potential. When we analysed the three-year and five-year performance of the same funds that showed negative or flat returns over the past year, a very different story emerged.

For instance, the Tata Small Cap Fund recorded a negative 4% return over the past year. But when viewed over the long term, it delivered 21.41% annualised returns in three years and an impressive 31% annualised returns over five years.

Similarly, the Shriram Flexi Cap Fund, which also posted negative returns over one year, has generated 13% and 16% annualised returns over three and five years, respectively.

The HDFC NIFTY200 Momentum 30 ETF yielded 17.5% annualised returns in three years, while the Motilal Oswal Focused Fund offered 10.96% and 13.81% over three and five years, respectively. The Kotak Small Cap Fund, too, delivered a solid 18% (3-year) and 28% (5-year) annualised return.

These examples clearly show that while short-term returns may look disappointing, long-term investments tend to reward patience and consistency.

Therefore, investors must remember — SIPs are not meant for quick gains. To create meaningful wealth, one should invest with a long-term horizon and realistic expectations.

Still, if your SIP portfolio isn’t performing as expected, there are certain important things to keep in mind — especially to ensure that your investments remain on the right track.

Don’t panic and withdraw your investments prematurely

During a falling market, it’s quite normal for mutual fund investments to show short-term losses. However, that doesn’t mean you should rush to redeem your investments out of fear. Instead, it’s important to stay calm, review your fund’s performance carefully, and consult your financial advisor before making any decision.

Remember, if you redeem your equity mutual fund investments within one year, you may have to pay an exit load of around 1% in most cases — which can further reduce your returns.

One of the biggest advantages of SIPs is that they eliminate the need to time the market. When the market declines, your SIP allows you to buy more units at a lower price, helping you benefit from rupee cost averaging over time.

How much risk can you take? Assess before you invest

Before starting any investment, it’s crucial to evaluate your risk-taking capacity. Your investment strategy should always align with your financial goals, time horizon, and comfort with market volatility. If you have a high-risk appetite, building a pure equity portfolio can be a suitable option. However, such investments should always have a minimum horizon of five years to ride out market fluctuations and benefit from compounding.

On the other hand, if you are a moderate-risk investor, you should aim to balance your portfolio with a mix of debt funds, hybrid funds, or government-backed schemes. This helps reduce volatility while still offering reasonable growth potential.

For such investors, aggressive hybrid funds — which combine equity and debt exposure — can be an excellent middle path, offering the potential for steady returns with controlled risk.

Compare your portfolio before making any move

If your mutual fund portfolio is showing negative returns, don’t panic — instead, compare your fund’s performance with other schemes in the same category as well as across different categories. If you find that your fund’s performance is only slightly below that of the top-rated funds, there’s usually no need to switch immediately. Short-term underperformance can often correct itself as market conditions stabilise.

However, if there is a significant performance gap compared to leading funds in the same category, it’s wise to consult your financial advisor before making any switch. Sudden or emotional changes in your investment strategy can sometimes do more harm than good. Also, remember that diversification is crucial for successful investing. A well-diversified portfolio — spread across different asset classes, fund types, and sectors — helps reduce risk and ensures better stability during market volatility.

Is pausing your SIP the right decision?

Many investors, when faced with continuous losses or a prolonged market downturn, choose to pause their SIPs — believing it will help reduce their losses. The idea is to stop investing when the market is falling and resume once it stabilises. However, this is actually a loss-making strategy in the long run. When the market is down, your SIP helps you buy more units at lower prices, which significantly improves your average cost per unit. Later, when the market recovers, those low-cost units generate higher profits, boosting your overall returns.

By pausing your SIP during market corrections, you lose out on this powerful rupee cost-averaging benefit — one of the key advantages of systematic investing.

Diversification is the key

Diversification is a key element of successful investing. That’s why, while investing in mutual funds, it is important to focus on building a well-diversified portfolio. You can consider including funds from different categories to balance risk and returns. It may also be a good idea to add multi-cap and flexi-cap funds to your portfolio, as they provide exposure across various market segments. However, diversification doesn’t mean adding too many funds unnecessarily.

Spreading your SIPs across 8–10 different schemes can make your investments scattered and difficult to manage. The goal should be balanced diversification, not over-diversification.

(Source : value research, financial blogs of AMC and brokerages)

(Note: There is no guarantee that the past returns of any equity fund will continue in the future. Performance may or may not remain the same going forward. Since investments in the market are subject to risk, it is advisable to consult a financial expert before investing.)

Note: This content has been translated using AI. It has also been reviewed by FE Editors for accuracy.