Five-Year SIP Review Shows Positive Returns Across Equity Mutual Funds

A five-year review of equity mutual fund investments through Systematic Investment Plans (SIPs) has highlighted the potential benefits of staying invested through market cycles. An analysis of 219 equity mutual funds found that every fund in the study generated a positive XIRR on SIP investments made over the five-year period ending September 1, 2026.

The findings are particularly relevant for investors who may have stopped their SIPs or withdrawn money during periods of market uncertainty. While individual fund performance varied considerably, the overall data showed that investors who maintained their SIPs for five years would have ended the period with gains.

165 funds delivered double-digit XIRRs

The analysis found that 165 of the 219 equity funds generated annualised SIP returns of at least 10%. The remaining 54 funds recorded single-digit XIRRs, but none of the funds in the study produced a negative return over the five-year period.

The results also demonstrate that investors did not necessarily need to select the very best-performing fund to generate positive returns. Funds across categories, including mid-cap, small-cap, large-cap, flexi-cap, focused and ELSS schemes, featured in the analysis.

At the top of the performance table was HSBC Midcap Fund, which recorded an SIP XIRR of approximately 22.70%. A hypothetical monthly SIP of Rs 10,000 over the five-year period would have accumulated to about Rs 10.53 lakh.

ITI Small Cap Fund followed with an XIRR of 22.52%, while Bandhan Small Cap Fund posted 22.03%. In Bandhan Small Cap Fund, the same Rs 10,000 monthly SIP would have grown to approximately Rs 10.36 lakh during the period.

Mid-cap and small-cap schemes dominate the higher-return segment

Several mid-cap and small-cap funds occupied the upper portion of the performance rankings.

Invesco India Midcap Fund generated an XIRR of 21.74%, while Bank of India Small Cap Fund delivered 21.24%. Invesco India Smallcap Fund and Motilal Oswal Large & Midcap Fund also crossed the 21% mark, recording 21.12% and 21.03%, respectively.

ICICI Prudential Midcap Fund posted a 20.10% XIRR. DSP Small Cap Fund and Edelweiss Mid Cap Fund each delivered 19.22%.

HDFC Mid Cap Fund recorded 19.19%. A monthly SIP of Rs 10,000 in the scheme would have grown to roughly Rs 9.67 lakh over the five-year period. Quant Small Cap Fund delivered an XIRR of 18.40%, while Nippon India Small Cap Fund recorded 17.53%.

The numbers underline an important feature of SIP investing: returns are generated from a series of investments made at different market levels rather than from a single lump-sum entry point.

Large-cap and diversified funds also remained profitable

The study was not limited to aggressive equity categories. Diversified and relatively broader investment strategies also produced positive results.

HDFC Flexi Cap Fund recorded an XIRR of 15.81%, while ICICI Prudential Focused Fund and HDFC Focused Fund delivered 15.17% and 15.14%, respectively.

SBI ELSS Tax Saver Fund registered an XIRR of 13.46%. Baroda BNP Paribas Large & Mid Cap Fund, Union Large & Mid Cap Fund and DSP Large & Mid Cap Fund posted returns of 12.47%, 12.46% and 12.42%, respectively.

Parag Parikh Flexi Cap Fund recorded an XIRR of 11.05%. The analysis also showed that several funds generated returns below 10%, illustrating that positive performance does not mean all schemes delivered similar outcomes.

Among the lower-returning schemes, Shriram ELSS Tax Saver Fund and Shriram Flexi Cap Fund recorded XIRRs of 5.51% and 5.35%, respectively. Even so, their SIP investments remained positive over the period covered by the study.

What the five-year data means for SIP investors

The findings offer an important lesson about investment behaviour. Equity markets can experience sharp corrections, rallies and periods of uncertainty within a five-year window. Investors who react emotionally to short-term declines can potentially miss subsequent recoveries.

A SIP approach is designed to spread investments across different market conditions. When markets fall, the same monthly contribution purchases more units; when markets rise, the accumulated units participate in the recovery. Over a sufficiently long period, this process can help investors avoid relying on a single market-entry point.

However, the five-year results should not be interpreted as a guarantee that every equity mutual fund will always deliver positive returns over five years. Market conditions, fund strategy, portfolio composition and the investor's entry and exit dates can all influence actual outcomes.

The analysis specifically examined regular growth options and calculated SIP performance for investments made between September 1, 2021 and September 1, 2026. It was intended as a historical performance assessment rather than an investment recommendation.

For investors, the broader takeaway is that patience can matter significantly in equity investing. Rather than judging an SIP solely by short-term fluctuations, investors may benefit from assessing whether the chosen fund continues to match their financial goals, risk tolerance and investment horizon.

The five-year data therefore provides a useful reminder: exiting an equity SIP during a difficult market phase may mean giving up the opportunity to participate in a later recovery. At the same time, investors should review their portfolios periodically and make decisions based on their individual financial circumstances rather than historical returns alone.