Many investors find their patience tested when Systematic Investment Plans (SIPs) deliver little to no returns in the initial years. A common concern arises when a two-year SIP shows zero or even negative performance, leading some to consider discontinuing their investments prematurely.
Historical Data Reveals Surprising Recovery
However, an in-depth analysis of Nifty 500 TRI rolling SIP returns spanning more than two decades suggests a different story. The CRISP Mutual Fund Scorecard for June 2026, conducted by Share.Market (PhonePe Wealth), examined 50 historical instances where a two-year SIP generated returns ranging from negative to a modest 5%.
The findings are compelling: of the 32 cases where a two-year SIP yielded zero or negative annualised returns, not a single one remained negative after extending the investment period to five years. Furthermore, a remarkable 68.7% of these cases ultimately delivered double-digit annualised returns.
- 0% or below (2-year SIP): 32 historical cases.
- After 5 years:
- 0% remained 0% or below.
- 9.4% delivered 0-5% annualised returns.
- 21.9% delivered 5-10% annualised returns.
- 15.6% delivered 10-15% annualised returns.
- 53.1% delivered 15-20% annualised returns.
Even for the 18 instances where initial two-year returns were positive but low (up to 5%), the five-year outlook improved dramatically. None of these cases remained at 5% or below, with roughly 72% achieving double-digit annualised returns.
Why the Recovery Happens: Rupee-Cost Averaging and Horizon
This consistent recovery is largely attributed to the principle of rupee-cost averaging. During periods of market weakness, fixed monthly SIP contributions purchase more units at lower Net Asset Values (NAVs). When markets subsequently recover, these accumulated units contribute significantly to an improvement in overall returns.
The analysis strongly reinforces the critical importance of a longer investment horizon. While historical Nifty 500 TRI SIP data showed about a 1% chance of negative returns over five years, extending the horizon to seven to ten years historically reduced the risk of capital loss to zero. At the ten-year mark, approximately 90% of outcomes delivered double-digit annualised returns.
It is important to remember that past performance is not an indicator or guarantee of future results. However, this historical evidence provides a strong argument against judging an equity SIP solely on its initial 24 months, highlighting the potential for substantial recovery and growth over a longer investment period.