If you’ve been investing in mutual funds through a SIP for a while, there’s a good chance you’ve felt this at some point — you look at your portfolio, you see it’s down, and a little voice in your head says “Is this even working?”
You’re not alone. Almost every SIP investor goes through this. And here’s the uncomfortable truth: the feeling that your fund isn’t working is often the exact moment your fund is working hardest for you.
Let’s talk about why.
Good Often Look Bad in the Short Run
This is the central paradox of mutual fund investing that nobody warns you about upfront.
When mid-cap and small-cap stocks are flying, your large-cap or diversified fund will look boring by comparison. When one hot sector dominates the headlines, a well-diversified fund that doesn’t bet everything on that sector will seem like it’s sleeping. When everyone around you is talking about some shiny new NFO giving 40% returns, your disciplined SIP fund will look dull.
But that’s the whole point.
A good fund is built to protect you in crashes, smooth out volatility over time, and compound steadily — not to win every single month or quarter. The fund that looks boring during a bull run is often the one that saves your wealth when things go south.
Benjamin Graham put it well: “Investing is not about beating others at their game. It is about controlling yourself at your own game.”
5 Reasons Your Fund Might Be Lagging
Before you hit that “Redeem” button, here’s what might actually be happening:
1. Market Cap Cycles Are Rotating. Large-cap, mid-cap, and small-cap stocks don’t move together. They take turns to take the lead. Your holdings won’t always be in the segment that’s currently winning — and that’s by design, not failure.
2. Fund Categorisation Decides Exposure. SEBI requires each fund category to maintain specific stock allocations. A Flexi-Cap fund can’t suddenly go all-in on one hot sector. A Value fund must stick to its style even when growth is booming. This is a safety net for you — but it means the fund will lag in certain cycles.
3. Events Hit Unevenly. Interest rate decisions, currency movements, FII flows, global slowdowns — these hit different sectors differently. Your fund might be holding quality stocks that take a short-term hit even though the long-term thesis is intact.
4. You Might Be Using the Wrong Benchmark. Comparing a Balanced Advantage Fund to the Nifty 50 during a bull run is like comparing a car to a motorcycle and complaining the car can’t weave through traffic as fast. Each fund type has its own benchmark for a reason.
5. NFO Noise Gets Loud. Thematic funds and New Fund Offers dominate conversations — usually after they’ve already had their big run. A disciplined fund ignores this noise. That restraint creates short-term friction, but it’s the right call.
The Most Expensive Mistake Indian Investors Make
You know the pattern. It goes something like this:
Markets are rising → you start a SIP → portfolio is up 30% → you feel great → correction begins → portfolio is down 20% → panic sets in → you stop your SIP and redeem → markets recover → new all-time highs → you watch from the sidelines.
It happens to so many people, and it’s the single biggest destroyer of wealth in Indian retail investing.
Data since 1997 shows that patient investors in the Nifty 50 have earned between 10-15 % in every 20-year period since then. The average retail investor — adjusting for behaviour will earn much less than that. The market dosen’t fail these investors. They stepped off the train just before it reached the destination.
Let’s Flip Some Common Thoughts Around
“My fund is underperforming the Nifty. I should switch.” A Flexi-Cap or Balanced Advantage Fund is built for different goals than the Nifty 50. If you switch now, you may be locking into a loss and walking away from a fund that’s doing exactly what it was designed to do.
“The NAV has been falling for 6 months. This SIP isn’t working.” When NAVs fall, your SIP buys more units at a lower price. Rupee cost averaging is literally working in your favour right now. Stopping it is like refusing to buy vegetables on sale because the price has dropped.
“That thematic fund is giving 40%+ returns. I should move.” Thematic funds peak before you hear about them. By the time a theme is dominating conversations and news articles, the easy money has already been made. Chasing it is one of the surest ways to destroy wealth.
“FIIs are selling. I’ll pause my SIP until things stabilise.” FII outflows are almost always temporary. And DII buying and retail SIP flows have cushioned the market in recent times. You pausing means you miss the recovery.
6 Things You Can Actually Do Right Now
1. Define your goal, not the benchmark. Your goal is ₹1 crore or more for retirement or saving for your child’s education — not beating the Nifty 50 every quarter. Measure your progress against your goal.
2. Accept that your SIP will live through major crashes. Over a 15–20-year horizon, that’s just how markets work. Each dip may not be a warning sign. It may be an opportunity to accumulate units cheaply.
3. Know what kind of fund you own. A Value fund will lag when growth stocks are booming. A BAF will underperform in a straight-up bull run. That doesn’t mean the fund is bad — it means it’s doing its job.
4. Stop checking NAV every day. Instead, ask: Is the fund manager still consistent? Is the investment thesis still intact? Those are the real questions.
5. Start a Step-Up SIP and stick to it. Increase your SIP by 10% each year. The years when markets are down are when you accumulate the most units — and those units do the heavy lifting when markets recover.
6. Talk to a SEBI-registered advisor. The most important job of a good MFD or RIA is keeping you from making panic-driven decisions when markets are scary. That alone is worth a lot.
Reach out to M2W to invest in mutual funds, minus the confusion and the noise.
