A recent 20-year study of Systematic Withdrawal Plans (SWPs) demonstrates their remarkable potential to generate consistent monthly income from mutual funds while simultaneously growing the investment corpus. The analysis presented a compelling case: an initial ₹10 lakh investment, from which ₹12 lakh was systematically withdrawn over two decades, astonishingly still resulted in a remaining corpus of more than ₹1 crore.
Unlike a one-time lump sum redemption, an SWP allows investors to withdraw a fixed amount periodically, such as monthly, while the remaining capital continues to be invested and participate in market growth. This strategy is widely favored by retirees and others seeking a steady income stream from their mutual fund holdings. The new study, however, underscores that with disciplined investing and judicious fund selection, SWPs can also preserve and significantly grow wealth over the long term.
The analysis, based on data up to July 16, 2026, examined the performance of prominent hybrid and asset allocation mutual funds. It simulated a ₹10 lakh lump sum investment made on August 1, 2006, with a consistent monthly withdrawal of ₹5,000. Over the subsequent 240 months, a total of ₹12 lakh was withdrawn. Despite these substantial payouts, the top-performing fund in the study managed to accumulate a final corpus exceeding ₹1.04 crore.
Top Performers: Multi-Asset Funds Lead
Among all categories, the ICICI Prudential Multi Asset Fund delivered the most impressive results. After facilitating ₹12 lakh in monthly SWP withdrawals, the initial investment grew to ₹1,04,75,390, reflecting a compound annual growth rate (CAGR) of 15.28% over the 20-year period.
Other multi-asset funds also demonstrated robust performance. The Quant Multi Asset Allocation Fund achieved a CAGR of 12.13%, while the HDFC Multi Asset Fund and SBI Multi Asset Allocation Fund posted CAGRs of 10.03% and 9.09%, respectively. The diversification inherent in multi-asset funds—exposure to equities, debt, and gold—proved effective in navigating market fluctuations, supporting long-term capital appreciation alongside regular income withdrawals.
Hybrid Funds Also Deliver Strong Outcomes
The aggressive hybrid category likewise produced encouraging returns. The ICICI Prudential Equity & Debt Fund emerged as the category leader, leaving investors with ₹75.15 lakh after two decades of monthly withdrawals. This fund recorded a 13.71% CAGR during the study period. Several other aggressive hybrid funds, including HDFC Hybrid Equity Fund, DSP Aggressive Hybrid Fund, Tata Aggressive Hybrid Fund, and Aditya Birla Sun Life Equity Hybrid '95 Fund, also generated annualised returns of approximately 13%, allowing investors to maintain a substantial investment corpus while drawing regular income.
In the dynamic asset allocation category, the HDFC Balanced Advantage Fund distinguished itself with a 15% CAGR, resulting in a corpus of ₹98.81 lakh despite consistent withdrawals.
Key Study Parameters:
- Initial Investment: ₹10,00,000 (Lump sum)
- SWP Amount: ₹5,000 per month
- SWP Period: August 1, 2006 – July 16, 2026
- Total Monthly Withdrawals: 240
- Total Amount Withdrawn: ₹12,00,000
The Mechanics Behind SWP Success
The core principle behind the success of SWPs lies in their ability to allow the remaining investment to continue compounding. Unlike a full redemption, periodic withdrawals mean a significant portion of the corpus stays invested, benefiting from market growth. The study clearly illustrates that when the fund's returns consistently outpace the withdrawal rate, investors can secure a regular income stream without necessarily depleting their principal. Instead, the balance continues to grow over the long term, offsetting the impact of the withdrawals.
Fund Selection Remains Crucial
While the analysis highlights the power of SWPs, it also underscores that outcomes vary significantly based on fund choice. Top-performing funds delivered double-digit annualised returns and preserved a substantial corpus, but some schemes yielded considerably lower returns, resulting in much smaller final balances. This disparity emphasizes that selecting the right mutual fund scheme is paramount, rather than relying solely on the SWP strategy itself.
Although historical performance does not guarantee future results, this study reinforces a vital lesson for long-term investors: a combination of disciplined investing, appropriate asset allocation, and remaining invested through various market cycles can establish a reliable income source while simultaneously fostering continued wealth growth.