Mutual fund SIP guide: How to invest for the rest of 2025

Time of India

17 hours ago

As the second half of the year kicks off, mutual fund investors using the
SIP
route may be thinking about their next move — whether to continue as is, increase their investments, or adjust their strategy — especially with markets showing strength but also some short-term
volatility
, to which experts recommends that investors should stick to their SIPs regardless of market levels.
'Rather than reacting to highs or corrections, the focus should be on time horizon and goals. SIPs work best when held over the long term, allowing rupee cost averaging to play out. Adding a step-up every year—say by 10–15%—can significantly boost corpus over time without relying on market timing,' Sagar Shinde, VP of Research at Fisdom, shared with ETMutualFunds.
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According to Association of
Mutual Funds
in India (AMFI), SIP is a simpler approach to long term investing is disciplining and committing to a fixed sum for a fixed period and sticking to this schedule regardless of the conditions of the market.
Another expert, while mentioning what SIP is, said that in past corrections—such as the 2020 market fall—investors who continued their SIPs ended up buying more units at lower NAVs, which lowered their average cost per unit and when markets recovered by 2021, this led to higher portfolio growth.
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'In contrast, during high valuation periods (like Jan 2022 or May 2025), the same SIP amount buys fewer units, but historical data shows the value of previously accumulated units rises. Despite market volatility, SIP inflows in India touched Rs 26,688 crore in May 2025, reflecting continued participation across market phases,' Chakravarthy V, co-founder and Executive Director of Prime Wealth Finserv told ETMutualFunds.
In the first half of the current calendar year, sectoral and thematic funds have ruled the return chart and offered upto 32% return in the same period. The first 46 funds were sectoral and thematic funds.
Looking at the average return offered by the equity categories, banks & financial services funds have offered the highest average return of 12.29% followed by international funds which gave 9.03% average return.
Large cap funds outperformed mid caps and small caps and gave an average return of 4.87% whereas mid cap funds gave an average return of 1.44% and small cap funds lost 2.13% in the first half of the current calendar year.
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Out of 21 categories, 16 gave positive returns whereas five gave negative average returns. Technology funds lost the most of around 4.44% followed by pharma & health care funds which lost 3.54% in the same period.
Post analysing the performance by equity mutual fund categories in the first half of CY2025, Shinde advises flexi cap, large cap, and focused equity funds as the strong SIP candidates today due to their ability to navigate market cycles.
For more conservative investors, hybrid and multi-asset funds offer diversification across asset classes and help manage short-term volatility, he added.
Chakravarthy V said that after looking at AMFI data as of May 2025, small-cap and mid-cap categories have shown the highest 10-year SIP CAGR—ranging between 22% to 26% and a Rs 10,000 SIP in certain small-cap funds has grown to Rs 49 lakh in 10 years but these categories also showed larger drawdowns during volatile periods.
'Sectoral and thematic categories, like infrastructure and manufacturing, have also seen strong short-term growth but are known to follow cyclical patterns. In contrast, multi-asset and hybrid categories have delivered 12–16% CAGR over the past 10 years, with historically lower volatility and drawdowns compared to pure equity categories,' Chakravarthy V further explained.
According to the monthly SIP contribution data by AMFI (Jan- May), in the current calendar year so far, the total SIP contribution has been nearly Rs 1.31 lakh crore against Rs 98,571 crore in the same period a year ago.
Till the last available data, the SIP contribution has surged from Rs 26,400 crore in January to Rs 26,688 crore in May. In the current financial year so far, the total SIP contribution by the investors have been approximately Rs 53,320 crore.
Many experts recommend that step-up SIP allow investors to incrementally raise their contributions, adapting to increasing income and changing financial goals.
With gold, silver, and equity market rallying and investors confused about which one to choose for investment, the market experts are recommending that given the current geopolitical backdrop, political uncertainty, and global inflationary pressures, investors should prioritize a multi asset strategy as diversification helps in mitigating risk during turbulent times.
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So, considering these factors, the important thing to know is whether step-up SIP is wise now and whether investors should consider hybrid or multi-asset funds.
While addressing this, Chakravarthy V says that from a purely mathematical perspective, increasing SIP contributions each year tends to result in a higher final corpus, suppose a Rs 10,000 monthly SIP for 10 years at 12% CAGR results in a corpus of around Rs 23 lakh but if the SIP amount is increased by 10% annually, the final amount crosses Rs 35 lakh—a 50%+ increase driven entirely by rising contributions.
'Separately, funds that follow hybrid or dynamic asset allocation strategies have historically adjusted their equity exposure during high-valuation periods. For example, in early 2018 and late 2021, some of these funds reduced equity to as low as 30–40%, aiming to limit downside during subsequent corrections,' he added.
Believing that step-up SIP is a smart move for the second half of 2025 especially if income has grown, Shinde advices that for new SIPs, hybrid or multi-asset funds are a good starting point, offering a balanced approach to growth and stability in uncertain markets.
One should always invest based on their risk appetite, investment horizon, and goals.
(
Disclaimer
: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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