Systematic Investment Plans (SIPs) have long been preferred for investors looking to build wealth over time. They offer a disciplined approach to investing by allowing individuals to invest a fixed amount regularly, irrespective of market conditions. This method is particularly favored for navigating market volatility while accumulating wealth gradually. However, 2024 has proven to be challenging for many SIP investors, with several equity mutual funds failing to deliver positive returns. Discover the key SIP investment trends in 2024, highlighting funds with poor returns. SIP investment returns in 2024 were hit by losses in major equity mutual funds.
Underperformance in 2024: A Mixed Bag for Equity Mutual Funds
A recent analysis by ETMutualFunds revealed a concerning trend in 2024, as 34 equity mutual funds registered negative returns on SIP investments. This year, many funds underperformed, making it challenging for investors who relied on SIPs to accumulate wealth. Out of the 425 equity schemes reviewed, these 34 funds showed a negative Extended Internal Rate of Return (XIRR), reflecting the overall weakness in the equity market during the year.
Key Funds Facing Significant Losses
Several equity funds stood out for their significant losses in 2024, particularly those that performed poorly for SIP investments made at the beginning of the year. Among the worst performers, the Quant PSU Fund emerged as the biggest loser, with an XIRR of -20.28%. For investors making monthly SIP contributions of ₹10,000 since January 1, 2024, their total investment value had dropped to ₹90,763, highlighting a notable loss.
Similarly, the Quant ELSS Tax Saver Fund posted a steep decline, with a negative XIRR of -11.88%. The Aditya Birla SL PSU Equity Fund also showed a substantial negative return of -11.13% for the same period, marking a challenging year for these funds. Other funds from Quant Mutual Fund, known for their aggressive investment strategies, also faced significant losses.
- The Quant Consumption Fund recorded a negative return of -9.66%,
- The Quant Quantamental Fund saw a loss of -9.61%,
- The Quant Flexi Cap Fund registered a decline of -8.36%.
Additional Losses in Sectoral and Focused Funds
Other Quant funds that experienced losses in 2024 include the Quant BFSI Fund, which posted a negative return of -7.72%, followed by the Quant Active Fund, which lost -7.43%. Quant Focused Fund and Quant Mid Cap Fund recorded losses of -6.39% and -5.34%, respectively.
Sectoral funds, which tend to be more concentrated in specific industries, also underperformed this year. For example, the SBI Equity Minimum Variance Fund posted a loss of -3.06%, while the HDFC MNC Fund and Taurus Mid Cap Fund saw declines of -1.51% and -1.45%, respectively. These funds are typically considered more stable but face challenges due to a weaker economic environment and sluggish market growth.
PSU-Focused Funds Struggling Too
Public Sector Undertaking (PSU)-focused funds, which tend to be more conservative investments, also experienced negative returns in 2024. For instance, the ICICI Pru PSU Equity Fund saw a loss of -0.86%, while the SBI PSU Fund fell by -0.67%. Additionally, the Quant Business Cycle Fund posted a loss of -0.66%, and the Baroda BNP Paribas Value Fund recorded a decline of -0.62%.
Interestingly, the Tata Infrastructure Fund and Invesco India PSU Equity Fund showed only marginal declines of -0.05% and -0.04%, respectively. While these losses were comparatively small, they still highlight the overall trend of underperformance in the equity market during the year.
The Challenges of SIPs in 2024
The analysis by ETMutualFunds considered both regular and growth schemes of equity mutual funds, assessing their performance from January 1, 2024, to December 24, 2024. SIPs, once seen as reliable investment strategies, have not yielded the expected results for many investors this year.
While SIPs are designed to average out the cost of investments over time and mitigate the impact of short-term market volatility, the extended period of underperformance in many equity mutual funds in 2024 has left investors questioning the effectiveness of this strategy during challenging market conditions.
Despite these setbacks, SIPs remain a long-term investment tool, and experts recommend staying invested, especially for those with a longer investment horizon. The idea is to ride out market volatility and ensure that the disciplined approach of SIPs continues to build wealth over time, even if the short-term returns are not as promising as expected.
The Way Forward: A Long-Term Perspective
Experts continue to advise investors not to panic and exit their SIPs prematurely. The equity market is known for its volatility, and even though 2024 was a challenging year for several funds, historical trends suggest that markets will eventually recover. For long-term investors, staying invested through SIPs is still prudent, ensuring you benefit from the compounding effect over time.
Moreover, reviewing and diversifying your portfolio regularly can help mitigate risks. Investors may want to consider rebalancing their portfolios by allocating funds into more stable or conservative asset classes, especially as they approach their financial goals or retirement.
Conclusion
SIP investment returns in 2024 were hit by losses in major equity mutual funds. 2024 has been a disappointing year for many equity mutual funds, with several funds posting significant losses on SIP investments. However, the long-term nature of SIPs and the fundamental principle of investing in diversified portfolios remain critical for wealth accumulation. While the performance in 2024 has been challenging, investors need to maintain their focus on long-term goals and continue investing regularly to weather short-term fluctuations in the market.