According to fresh SEBI data cited on Zee Business, 731 mutual fund schemes ended FY26 with negative returns, compared with 243 schemes in the previous year. Of these underperforming schemes, 93 delivered returns of up to -10 per cent. However, experts cautioned that this figure should not be viewed in isolation, emphasizing that fund category, market conditions, portfolio construction and investment strategy must be considered when assessing performance. The latest analysis shows that Step-Up SIPs with 10% annual increases can mathematically force wealth to scale, helping investors beat inflation through systematic investment growth.
As reported by Zee Business, experts identified seven critical mistakes that investors should avoid when using SIPs for long-term wealth creation. Kshitiz Mahajan, CEO of Complete Circle Wealth, emphasized that investors should not treat SIPs like fixed deposits, stating that long-term investing requires strategy and regular review. He noted that even a 12-13 per cent return can be very good when viewed in the context of long-term compounding and inflation. The latest analysis shows that Step-Up SIPs with 10% annual increases can mathematically force wealth to scale, helping investors beat inflation through systematic investment growth.
According to the expert guidance, investors should avoid chasing past returns and instead focus on rolling returns rather than fixed-period returns. Hrishikesh Palve, Director at Anand Rathi Wealth, recommended that ordinary investors stay away from sectoral and thematic funds due to their concentration risks. He suggested a diversified approach with 55 per cent in large caps, 20-25 per cent in mid caps and the remainder in small caps for open-ended diversified schemes. For long-term goals beyond 5-7 years, large-cap, mid-cap, and flexi-cap mutual funds should form the core portfolio, as active fund managers aim to select high-quality companies that can navigate economic turbulence. The diversification strategy should include stocks for growth potential, bonds for income and stability, cash for liquidity, and alternative investments for additional portfolio risk management.
As reported by Zee Business, the experts stressed the importance of portfolio review as the fourth step of investment management. Palve described this as crucial because it tells investors whether they are moving towards their goals. During reviews, investors should check fund performance, risk measures including Sharpe ratio, Sortino ratio and standard deviation, and whether asset allocation remains aligned with original strategy. The analysis emphasizes that real returns matter more than nominal returns - if a fund generates a 12% CAGR against a 6% inflation rate, the investor achieves a 6% real return. Regular portfolio rebalancing is essential to maintain intended risk levels, with experts recommending annual reviews or when allocations drift more than 5 percentage points from targets.
The central message from experts is that SIPs should not be viewed as guaranteed-return products or investments that can be left unattended. According to Mahajan, the core purpose of investing is long-term goal planning, wealth creation and generating returns that can beat inflation. He compared the approach to repeatedly changing queues, highlighting that unnecessary fund switching can disrupt the compounding process and increase costs through capital-gains tax implications. The latest data shows that equity mutual funds historically outpace inflation over long-term horizons of 7-10 years, with corporate earnings acting as a natural hedge against inflation through structural growth. As investors approach retirement, emphasis shifts from long-term growth to capital preservation, with sequence-of-returns risk becoming more important as significant losses early in retirement can have lasting impacts on portfolio income generation.
