SIP Investments Strong Despite 14% Fall In NAVs Of Equity MFs

Equity mutual fund performance declined in the past few months due to the NAV being down by 14% since the September 2024 highs, according to Kotak Institutional Equities.

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The correction in March 2026 reduced returns for systematic investment plan (SIP) investors, particularly those who started investing between 2022 and 2025. According to the report, many portfolios have reported muted or negative internal rates of return (XIRR), compared to the double-digit gains seen during the post-pandemic rally.

SIP Inflows Remain Steady

Despite lower returns, SIP inflows have remained consistent. The active inflows for equity mutual funds in the first quarter of the year 2026 were ₹1.1 trillion.

It is evident from the report that the investors also continued making lump-sum investments in market crashes, implying that mutual funds were being used.

High-Beta Segments See Larger Impact

The impact of the decline has been more visible in small-cap and sectoral or thematic funds. These categories have delivered negative returns on aggregate over the past 18–24 months, according to Kotak Institutional Equities.

These segments had seen higher inflows during earlier market rallies, which increased the impact of subsequent corrections on investor portfolios.

Foreign Outflows And Market Trends

Foreign portfolio investors recorded net outflows of nearly $19 billion in 2026 so far, as per the report. During the same period, markets such as South Korea and Taiwan saw relatively stronger inflows. Mutual funds that operate domestically, which benefit from consistent SIP inflows, took care of a certain amount of these capital flows out of the country.

It is interesting to note that the amount of cash held by mutual funds is decreasing, limiting their cushion against further foreign exits. The combination of SIP flows along with poor performance shows that there are clear disconnects between flows and performance in the current phase of the markets.