The negative return of SIPs in equity mutual fund schemes over the past 1-2 years is expected to lead to a rise in discontinuation and sharp jump in SIP stoppage ratio in coming months. According to data sourced from Geojit Research, the most popular small and flexi-cap categories have given an average negative return of 15% and 14% over the last one year, while it was down 7% and 5% over two years due to market mayhem amid the raging West Asia war. Similarly, the average return from large and multi cap schemes were down 14% and 13% over one year and dipped 5% each in 2 years. Recent market sell-offs have further pushed these investments into negative territory, with experts advising investors to continue SIPs and top them up to accumulate more units at current prices.
As reported by Geojit Research, large and mid-cap funds have given a negative return of 12% and 4% over one and two year period, with mid-caps showing similar performance at 11% and 3%. The data reveals that smallcap MFs have delivered the worst performance with negative returns of 15.23% and 6.92% over one and two years respectively. Flexicap MFs have also underperformed with negative returns of 14.28% and 5.34% over the same periods. Large and multi cap schemes showed better resilience with positive 3-year returns of 3.12% and 5.34% respectively. However, recent market volatility has impacted these categories, with less than half of equity mutual funds delivering positive returns in FY26, while international funds led performance with triple-digit returns.
According to The Hindu BusinessLine, given the market turbulence, the SIP stoppage ratio has already increased one percentage point to 76% month-on-month in February. Shweta Rajani, Mutual Fund Head at Anand Rathi Wealth, noted that it is natural to see nervousness among investors when SIP returns turn negative, but emphasized that the real benefit of SIP comes from accumulating more units when markets are volatile. Harsh Gahlaut, co-founder & CEO of FinEdge, highlighted that the current phase of negative returns could accelerate SIP stoppage rates further, with investors reacting to unmet expectations and slowdown in new SIP registrations. Despite these challenges, SIP contributions continued to grow with a 14.79% year-on-year increase to ₹29,845 crore in February 2026, reflecting sustained retail investor confidence.
As reported by The Hindu BusinessLine, industry experts emphasize that SIPs are inherently designed for longer horizons and short-term underperformance is not unusual in equity cycles. Shashank Udupa, Fund Manager at smallcase, noted that while this can be scary for newer investors, SIPs are designed for longer horizons and short-term underperformance is not unusual. Ponmudi R, CEO of Enrich Money, explained that such periods enable more effective rupee-cost averaging, allowing disciplined investors to accumulate units at lower valuations. Hariprasad K, founder of LIvelong Wealth, observed that the reaction is clearly bifurcated with investors in the market for 2-3 years pressing the pause button, while those who experienced the post-2020 rally staying strong. For FY27, experts advise a diversified approach focusing on broader international and Indian funds for SIPs, with recommendations to avoid chasing past performance and maintain balanced portfolio allocation.
