A few months ago, a senior mutual-fund executive told me something that made me do a double take. “SIPs are a problem,” they said. Now, I wasn’t expecting to hear that from a beneficiary of an industry that came up with “SIP sahi hai”.

This masterstroke of a pitch, loosely translated as “SIPs are appropriate”, has captured the imagination of the Indian investor and helped the country’s mutual-fund market grow leaps and bounds over the past few years. Millions of retail investors are now religiously salting away money in systematic investment plans (SIPs)—month after month, in scores of mutual-fund schemes, mostly those that invest in stocks. Every new month sees record inflows, with over Rs 29,000 crore coming in in September.

The executive’s gripe was with the way the mutual-fund industry marketed and projected SIPs: as a fail-proof, number-go-up, panacea-for-all-ills mode of deploying money into the equity market. 

I again did a double take when Sanjeev Prasad, managing director and co-head of Kotak Institutional Equities, debunked the mutual-fund hype in a hard-hitting interview with The Ken in September. 40% of retail inflows since 2021 have yielded zero returns, he pointed out. Safe to say that a good part of these inflows came from SIPs. 

These two interactions set me thinking—are SIPs really sahi (appropriate)? I started looking for data to test the hypothesis, and it’s as if Rajan Raju heard me.

Last month, Raju, who runs Invespar Pte, a single-family office in Singapore, published a research paper titled with the exact same question: Are SIPs Really ‘Sahi’? A Continuous-Time Analysis of Systematic Investment Plans in Indian Equity Markets. It’s a mouthful, and it’s packed with numbers, math, stats, and calculations—one for the geeks.

It’s also packed with insights and conclusions that offer a far more nuanced perspective of SIPs than what the marketing machine of India’s mutual-fund industry would have you believe. As the paper puts it, “Current ‘SIP Sahi Hai’ messaging oversimplifies complex trade-offs and may contribute to unrealistic expectation formation.”

Put very simply, the paper concludes that SIPs are not always sahi.