Mutual fund SIP returns disappointing? Should you stop, continue or switch funds

This year has been tough for equity market investors. Global uncertainties such as the US-Iran war, US trade tariffs, and concerns over AI-led disruption weighed on market sentiment. Higher crude prices and concerns over corporate earnings added to the pressure.

Sample this: Between November 2025 and October 2026, Nifty 50 TRI, a benchmark used to measure the performance of many large-cap mutual fund schemes, delivered -13.29%. This means an investment of ₹1 lakh would have reduced to less than ₹87,000 during this period. Nifty Midcap 150, a benchmark used to measure the performance of many mid-cap mutual fund schemes, delivered -3.62% return, whereas Nifty Smallcap 250, a benchmark used to measure the performance of many small-cap mutual fund schemes gained 6.16%.

Year-to-date, Nifty 50 TRI has delivered -0.72%, while Nifty Midcap 150 has and Nifty Smallcap 250 have returned returned 2.34% and 5.37% respectively.

Investors shouldn’t be perturbed by poor returns over the short term, opined Kaustubh Belapurkar, Director, Manager Research, Morningstar India. As history has shown us, equity markets will be volatile in the short term, and trying to time the market is futile, he argued and suggested that investors should continue to invest regularly through SIPs and remain invested for the long term in a volatile asset class such as equities.

Well-managed active funds generally fall less than their benchmarks in bear markets; he observed a similar trend in the recent period as well, Belapurkar told Livemint.

According to Morningstar's Active/Passive Barometer, which analysed 471 unique funds as of 30 June, more than 50% of active equity funds outperformed their passive counterparts over the one-, three-, and five-year periods. As per the report, despite hitting record highs in January 2026, Indian equity markets have been volatile due to underperformance by technology stocks, while mid- and small-cap indices have shown relative resilience.

According to the Association of Mutual Funds in India (AMFI), the SIP stoppage ratio climbed to 116% in October, as 5.9 million SIPs were either discontinued or completed their tenure, and net inflows into equity schemes dropped 14% month-on-month to ₹32,924 crore.

Stopping the SIP when the market is not moving or shows little growth over an extended period could adversely affect your long-term wealth. Simply put, it means missing the opportunity to accumulate more units when the prices are relativlely low. Pausing your SIP when the market is flat or down and restarting it when the market is high will reduce the long-term returns, as SIPs work on rupee cost averaging.

Historical data is a testimony to this. On 9 November 2010, Nifty 50 touched a peak of 6301.55 and subsequently declined to 4544.20 by December 2011 - a correction of nearly 28%. The index did not regain its November 2010 peak until 1 November 2013. The recovery took nearly 3 years. However, all 7 and 10-year rolling returns from 1 November 2010 were positive.

The data further shows that over 80% of the investors who remained invested for 10 years, earned12-15% return. This share fell to 63% for 7-year horizon , below 40% for 5 year horizon and nearly 26% for 3-year rolling period.

Investors are prone to behavioral biases, and their decisions are often driven by sentiment. Belapurkar recommends that a fund should generally be sold only if it has undergone a significant change in its investment process that makes it no longer suitable for your portfolio, or if there has been a change in the fund manager that merits reevaluation.

“Every investment style goes through periods of underperformance because of style headwinds. If you hold a fund with a well-defined investment process and a solid investment team, you are usually better off staying invested than chasing performance. A fund that has recently done well may not be suitable your portfolio, and it may soon face the same headwinds,” he told Livemint.

Devansh Sharma is Deputy Editor at Mint (Digital), where he leads newsroom operations and helps shape the website's editorial strategy. With nearly 15 years of experience in business journalism, he specialises in business, personal finance, stock markets, mutual funds, and economic developments, while also covering geopolitics and major breaking news. During his tenure at Mint, which spans nearly two years, he has led planning and coverage of key news events, including the Union Budget, RBI monetary policy announcements, US Federal Reserve decisions, elections, and major international developments.<br><br> Devansh holds a Master's degree in Journalism & Mass Communication from the School of Communication Studies, Panjab University. Before rejoining Mint, he worked with leading business news organisations, including The Economic Times, Moneycontrol, and ET Money. At ET Money, he served as Senior Investor Educator, where he created educational content to help readers better understand investing, mutual funds, and personal finance. Throughout his career, he has focused on making complex business and financial developments accurate, accessible, and relevant for a broad audience.

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