Actionable insights on equities, fixed-income, macros and personal finance Start 14-Days Free Trial
Actionable investing insights Get Free Trial
Mutual Funds

Nifty Breaks 6-Month Streak in September, 10 Year SIPs Down To Single Digit Returns


The Nifty broke a 6 months up-streak as it fell about 2% in the month of September, taking returns for the year down to 8.4%. This is still decent for the first nine months of the year.
As you can see: October is usually the most lousy month of the year on average, but with  a very large standard deviation. Some of the worst ever returns have happened in October, but we have seen three earlier Octobers (2013 to 2015) that have had only positive returns. Will this next month change things?
And of course, we have to have the Sensex:

SIP Returns Fall To Single Digits (10 year returns)

Systematic Investment Plans – investing a fixed amount each month – generally gives you great returns over the longer term. But it seems that Sensex returns – if you had invested every single month over 10 years – would have only given you a 8.1% return now. This is among the lowest 10 year return numbers we have ever seen.
(5 year and 3 year SIP returns are still decent)
Note that you can add about 1.5% to 2% of dividends each year so the return, post dividends, is still okay.
Also because India is a different market, mutual funds have outperformed. SIP returns there too will be higher (of the order of 12% to 15%).
What this doesn’t reveal yet is that 2007 was a massive upmove. If the Nifty or Sensex doesn’t move up substantially from here very soon, the 10 year SIP returns are going to fall to 7% and that won’t look good. (Advisor best practice: Please move to saying that 15 years is long term, 10 years passes just like that).
Just keeping it sane.

  • SK says:

    If there is one thing that is hated about the financial planning it is the definition of “long term” and as you rightly put it – changes or only increases year on year – hope there is a reversion to the mean for this as well!
    Markets are so undemocratic.

  • ajay says:

    10 Years ago is when I got my first job and started my mf journey. Initially it was lump sum for 3-4 years and regular SIP thereafter. Still getting tax free 16.47 % CAGR returns as of date inspite of the fact many MF’s in my portfolio are laggards when it comes to performance. So in indian context it seems being invested in MF is better as you pointed out.

  • Sandeep says:

    excellent article as usual! ..Good insights ..

  • Urban Nest says:

    This is extremely enlightening blog