Government-backed small savings schemes have delivered returns of up to 8.2% over the past two years, significantly outperforming several equity benchmarks and mutual fund categories during a volatile market phase. According to reports from The Economic Times, schemes such as the Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY) have continued to offer annual returns of 8.2%, while several popular equity benchmarks have generated only modest gains during the same period. The divergence highlights how fixed-income products have provided stability at a time when equity markets have struggled to maintain momentum. As per ET Wealth Online, these schemes have offered stable returns of up to 8.2% within the same timeframe, while major indices like the Nifty 100, Nifty Midcap 150 and Nifty Smallcap 250 have seen only modest returns.
Small savings schemes have remained attractive largely because interest rates have stayed unchanged since January 2025 despite expectations of lower rates in the broader economy. As reported by The Economic Times, among the highest-yielding options are SCSS and Sukanya Samriddhi Yojana, both offering 8.2% annually. The National Savings Certificate currently offers 7.7%, while the Public Provident Fund provides 7.1%. Other popular products, including the Monthly Income Scheme, Kisan Vikas Patra and five-year Time Deposits, continue to offer returns ranging between 7.4% and 7.5%. For investors seeking predictable income and capital protection, those returns have remained largely unaffected by swings in financial markets. According to ET Wealth Online, the National Savings Certificate (NSC) and the Public Provident Fund (PPF) are offering interest rates of 7.70% and 7.1% respectively, with the government maintaining these rates despite many indicators suggesting a possible rate cut.
The picture has been markedly different in equities, with data from NSE indices showing the Nifty 100 delivering a negative annualised return of 0.15% over the past two years. According to The Economic Times, the Nifty Next 50 has also remained in negative territory during the same period. Mid-cap and small-cap indices have fared somewhat better, with the Nifty Midcap 150 generating annualised returns of 4.39% and the Nifty Smallcap 250 delivering 1.12%. The performance reflects a period marked by global uncertainty, fluctuating interest-rate expectations and uneven corporate earnings growth. As per ET Wealth Online, the Nifty 100 index hasn't given any returns in the last two years, while other indices like Nifty Next 50, Nifty Midcap 100 and Nifty Smallcap 250 have also given modest returns in the same time period. Large and Midcap funds have delivered annualised returns of just 0.68% over two years, while flexicap funds generated 1.77% and ELSS funds returned 1.21%.
The trend extends to diversified equity mutual funds as well, with large-cap funds delivering annualised returns of just 0.68% over two years, while flexicap funds generated 1.77% and ELSS funds returned 1.21%. As reported by The Economic Times, among the major categories, mid-cap funds emerged as the strongest performers with annualised returns of 5.29%, though even that lagged several government-backed savings schemes. According to ET Wealth Online, data of key mutual fund categories picked from Morningstar shows that large, large and midcap, flexicap and multi cap categories haven't given any returns in the last one year. Looking at the two-year data, no category has delivered a 6% annualised return, while at the same time, some small savings schemes are offering 8%+ interest rates. The gap between guaranteed returns and market-linked returns has become increasingly noticeable for investors reviewing portfolio performance over the last two years.
While recent returns favour small savings schemes, longer-term data presents a different picture that demonstrates the impact of compounding over extended periods. According to The Economic Times, over the past decade, the Nifty 100 has delivered annualised returns of nearly 12%, while the Nifty Midcap 150 has generated close to 18% annually over the same period. Over 20 years, the Nifty Midcap 150 has produced annualised returns of 13.67%, while the Nifty 100 has delivered more than 10% annually. As per ET Wealth Online, the Nifty 100 largecap index has given 11.99% annualised return in 10 years and 10.64% in 20 years, while the Nifty Midcap 150 index has delivered 17.96% annualised return in 10 years and 13.67% in 20 years. Historical data suggests that equities continue to hold an advantage for investors with longer investment horizons and the ability to ride through market cycles. However, ET Wealth Online notes that investing in small savings schemes or equities just by looking at data can be misleading, as small savings schemes can be bad weather friendly, providing stable returns irrespective of market conditions, while equities are best suited for investors with a long-term horizon.
