Here's why investors should not give up prematurely on their SIPs

Investors may already have borne a large part of the pain in equities

Illustration: Ajay Mohanty

Some investors in mutual funds seem to be giving up on the expectation of a turnaround and are closing their systematic investment plans (SIPs) in equity funds. According to a recent report in Business Standard, the closure ratio of SIPs rose to 66 per cent in August and September (closure ratio is the number of SIPs discontinued to new SIPs registered). An examination of SIP return numbers shows that one- and three-year returns of large- and multi-cap funds are mostly in the positive zone (see table). The pain is greater in mid- and small-cap funds, where a high percentage of the ...