One-Year SIP Returns Turn Negative, What Investors Should Know?:

One-Year SIP Returns Turn Negative, What Investors Should Know? SIP known as a Systematic Investment Plan is a method of investing in mutual funds where investors can invest a fixed amount of money at regular intervals. SIPs are a simple way to invest in mutual funds and grow wealth over time. Investors who started SIPs in equity mutual funds last year are also losing as the market has been falling for four months. It helps investors to invest a fixed amount regularly in mutual funds. Investments in 715 equity mutual fund schemes through monthly SIPs have dropped by an average of 7.1%. The most affected categories are the ones that performed the best in 2024, attracting a large amount of retail investment. The mutual fund industry included more than one crore new unitholders the previous year with many new or inexperienced investors, traditionally fixed deposit holders, for the first time exploring the stock market. The best-performing fund, which invests in international stocks, achieved 30% over the past year. On the other hand, the worst-performing fund, a flexicap fund, dropped by 32%. During the market rally, some thematic funds, which attracted the most investments in 2024, saw losses as high as 19%. Small-cap funds experienced losses, with investors losing an average of 10.6%. These investors invested in equity funds motivated by the tremendous returns from those funds over the last three years. Their bad luck was their bad timing: the stock price was high immediately after the rally in the market. One investor suggested that investors should keep investing through their SIPs even during this downturn. because markets usually go through cycles. After a strong bull run of approx. four-and-a-half years it is normal for the market to take a break. Other suggests "Within equities, SIPs should be structured in such a way that there is 60% allocation to large caps, with the balance allocated to mid- or small-caps and sectoral themes tactfully."