A year of SIPs but no returns? Value Research explains what's going wrong

Give your funds at least three years before evaluating

If you’ve been doing monthly SIPs (Systematic Investment Plans) for a year or more and your portfolio seems to have barely moved, you’re not alone. Many investors who began in mid-2024 are scratching their heads at near-zero returns. Here’s what Value Research found — and how you can get back on track.

 

The Market’s Flatness, Not Your Mistake

 

The first and most important reason: the market itself hasn’t moved much. According to Value Research, between July 2024 and October 2025, the Nifty 500 index — which tracks a large chunk of listed equities — has risen by only around 2 %. 

 

 

So if your SIP shows just 1 % or 2 % return, it’s not necessarily bad fund performance; it’s the result of broader market stagnation.

 

2. One Year Isn’t Enough Time for SIPs

 

Investing is a long game. Value Research explains that judging a SIP after just one year is like critiquing a movie after its trailer. They found that only after three or more years can you meaningfully assess a scheme’s performance. 

 

If you’re early in your journey, temper expectations and focus on consistency rather than instant jumps.

 

3. Pausing Your SIP Undermines Its Power

 

One common behavioural trap: stopping your SIP temporarily when markets wobble.  Consistent contributions allow you to buy more units when markets fall; skipping months reduces that advantage.

 

4. You Might Not Be as Aggressive (or Aligned) as You Think

 

If you call yourself a high-risk investor but still pull back or spread your investments thin when markets drop, you’re signalling a moderate risk appetite. Value Research suggests that newer investors who struggle with volatility may be better served by aggressive hybrid funds rather than pure equity schemes. 

Value Research Online

 

It’s not a failure to start prudent — it’s a question of matching the product to your tolerance and time-horizon.

 

5. Over-Diversification and Too Many Funds

 

Lastly: owning too many mutual funds dilutes returns and complicates tracking. Value Research issues a warning: spreading your SIP across 8-10 funds (especially small-cap, infrastructure, etc.) can lead to overlapping holdings, multiple fees, and softer performance. 

 

For many investors, a simpler portfolio of 2-3 well-chosen funds is more effective than a long list of small bets.

 

What You Should Do Now

 

Hang on: Aim for a horizon of 5-10 years at minimum. One year of underperformance doesn’t mean your plan failed.

 

Keep contributing: Don’t stop your SIPs, even if you feel impatient. Consistency is the secret sauce.

 

Check your risk match: If you sit up at nights when stock markets fall, maybe you need a more stable fund or hybrid option.

 

Clean up your funds list: Quality over quantity. Too many small bets often reduce focus and returns.

 

Review, don’t react: Use regular review points (say annually) to check whether your fund choices still fit your goals — not every market dip is a cue to panic.

 

Invest in an aggressive hybrid fund: 

 

"For new investors, especially those still learning how they emotionally respond to market swings, starting with aggressive hybrid funds makes much more sense.

 

Aggressive hybrid funds invest 65–80 per cent in equities and the rest in debt instruments such as bonds. That debt cushion stabilises returns when markets turn rough, exactly what new investors need to stay invested without panic.And the data backs that up. When the Sensex has fallen more than 5 per cent over the last decade, aggressive hybrids have consistently fallen less than flexi-cap or small-cap funds," said Value Research in a note.

 

When Rohan (name changed), a young professional on Reddit, posted his investment portfolio, it caught the attention of the mutual fund community. He was investing ₹15,000 a month through SIPs — a great start — but here’s the catch: that amount was being split across 10 different mutual funds.To the untrained eye, that might seem like good diversification. But to seasoned investors and experts, it’s a classic case of “diworsification” — a term coined by legendary fund manager Peter Lynch, to describe how spreading your money too thin across too many investments can actually make your portfolio worse, not safer.

 

At ₹15,000 a month, each fund in Rohan’s portfolio was getting only ₹1,500 or less. That’s too small to make any meaningful impact, and over time, it creates a portfolio that’s hard to track, harder to rebalance, and almost impossible to evaluate effectively.

 

Worse, owning too many funds doesn’t necessarily diversify your risk — it just duplicates your holdings.

 

Most actively managed equity funds in India hold a similar mix of top-weighted large-cap stocks — think HDFC Bank, Reliance Industries, ICICI Bank, Infosys, and Larsen & Toubro. When you buy ten such funds, you’re not diversifying; you’re simply owning the same stocks ten times over.

 

This duplication not only dilutes returns but also makes it harder to know which funds are actually driving performance.

 

The smarter Way to build a Beginner Portfolio, as per Value Research:

 

For small SIPs or first-time investors, simplicity wins. According to Value Research analysts, two to three mutual funds are more than enough to build a balanced, growth-oriented portfolio.

 

Here’s what that looks like:

 

An Aggressive Hybrid Fund — for a blend of equity and debt exposure, providing stability and smoother returns.

 

A Flexi-Cap or Multi-Cap Fund — for diversified equity exposure across large, mid, and small-cap stocks.

 

(Optional) A Large-Cap Index Fund — for low-cost, steady exposure to India’s top companies through the Nifty 50 or Sensex.

 

This combination ensures that you benefit from both growth and balance, while keeping the portfolio manageable and transparent.