SIP inflows hit ₹1.26 trillion in April-July 2026, more than any full year before 2022. But 3-year flexicap returns are just 7.8%, as high valuations and FII selling weigh.
Alpha Score of 57 reflects moderate overall profile with strong momentum, poor value, strong quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
Systematic investment plan inflows into Indian mutual funds hit ₹1.26 trillion in the first four months of the fiscal year, more than any full year before 2021-22. The average 3-year return on flexicap funds, a popular equity category, has fallen to 7.8% a year.
Vivek Kaul, an economic commentator writing in Mint, argues that the success of SIPs has created its own problems. “The vast sums going into them have added significantly to Indian demand for stocks and helped push up and sustain prices,” he wrote. That pushed up valuations, making it harder for fund managers to find stocks at reasonable prices.
Data from the Association of Mutual Funds in India shows SIP folios jumped from 63 million in March 2020 to 183 million by March 2026. Net inflows into equity MFs peaked at ₹4.2 trillion in 2024-25 and slipped to ₹3.5 trillion in the following year. Foreign institutional investors sold a net ₹4.1 trillion of Indian stocks since April 2024, partly because of those high valuations. Domestic investors, including SIP money, absorbed much of that selling.
Kaul points out that cost averaging, a key benefit of regular investing, has not worked as well. “With so much money going into SIPs, cost averaging hasn't come into play properly,” he said. Stock prices have not fallen enough to let investors buy more units at lower prices. Competition for shares is also more intense now because the equity MF universe is much larger.
Holding periods remain short. As of June 2026, close to 40% of equity MF assets were held for up to two years, with 22% held for less than a year. Only 34% of SIP money had been invested for more than five years, Kaul noted.
The number of SIP folios in the ₹501-1,000 range, about a third of total folios, shrank 4.3% in 2025-26 from the prior year. SIPs over ₹1,000 grew just 1.8%, a sharp slowdown from 22% growth the year before.
Kaul's conclusion: “SIPs worked particularly well when stock prices were lower, competition for stocks was less intense and cost averaging meant more units bought when prices fell. Those conditions have changed.” Past returns, he said, cannot be extrapolated into the future.
Prepared with AlphaScala editorial tooling from the source reporting linked above. Indexable analysis may include a cited Alpha Score value. Publishing checks screen each story before release. Educational coverage, not personalized advice.