Don’t Pick Mutual Funds Based Only on Past Returns: Here’s the Real Formula for Powerful SIP Wealth Creation

A new report released in September 2025 has revealed a crucial insight for mutual fund investors: choosing a fund based only on past performance can lead to disappointment, especially for those building wealth through SIPs. The CRISP® Mutual Fund Scorecard, published by Share.Market (PhonePe Wealth Broking), analyzed five years of data and confirmed that a fund topping the charts once rarely stays there consistently. In other words, consistency matters more than a single period of high returns.

This study, based on equity and hybrid mutual fund categories, highlights that investors often make the mistake of chasing past winners. However, fund rankings tend to change drastically from one quarter to the next. A scheme that seems like a star performer in one period may underperform soon after. That is why investors should evaluate a fund’s behavior across multiple market conditions, not just its peak return.

### SIP Investing Reached Record Levels

Despite fluctuations in the broader market, the September quarter showed encouraging signs of disciplined investing in India. SIP (Systematic Investment Plan) inflows touched an all-time high of ₹29,361 crore, demonstrating strong long-term faith from retail investors. At the same time, gold and silver ETFs attracted record investments, while debt funds saw heavy redemptions of more than ₹1 lakh crore due to routine institutional withdrawals at the end of the quarter.

Nilesh D. Naik, Head of Investment Products at Share.Market, emphasized that “chasing winners is not sustainable. True wealth is created through disciplined and consistent SIP investing over the long term.”

### Why Past Returns Can Mislead Investors

The CRISP Scorecard’s rank-correlation study revealed a significant finding: past returns do not reliably predict future performance. Fund rankings keep shifting because market trends, economic conditions, and sector cycles continuously evolve. Instead, the funds that delivered the best risk-adjusted experience over the long term were those that demonstrated stability across different phases of the market—whether bullish, bearish, or volatile.

This approach gives investors a more realistic picture of how a mutual fund will behave over time, and how it may help them reach long-term goals.

### Funds That Showed Strong Long-Term Consistency

Based on performance, risk control, and consistency, the following mutual funds emerged as stable outperformers in their respective categories:

* **Large Cap:** ICICI Prudential, HDFC
* **ELSS (Tax Saving):** HDFC, Franklin India, SBI
* **Flexi Cap:** HDFC, Franklin India, JM
* **Mid Cap:** Motilal Oswal, Nippon India, Edelweiss
* **Contra/Value:** HSBC, SBI, Nippon India
* **Small Cap:** Nippon India, HSBC, Tata
* **Hybrid Categories:**

  * Aggressive Hybrid: ICICI Prudential, Edelweiss, UTI
  * Balanced Advantage: Baroda BNP Paribas, ICICI Prudential, Nippon India

These funds did not necessarily top every quarterly chart, but they generated steady performance without excessive volatility—a key factor for SIP-based investors.

Indian Investors Are Becoming Smarter and More Disciplined

The report also highlighted a notable shift in investor behavior. In earlier years, retail investors would panic-sell during downturns or rush into newly soaring funds in search of fast profits. Today, such reaction-based investing has decreased significantly. Instead, investors are holding their positions despite market noise, global uncertainty, or short-term volatility.

The record SIP figures prove that individuals are now prioritizing long-term financial planning, disciplined contributions, and process-based investment strategies. This is a sign of a maturing investment culture where wealth creation is increasingly viewed as a marathon, not a sprint.

A More Realistic Model for SIP Success

If there is one key lesson from the September 2025 CRISP report, it is this:

> “Don’t choose funds because they topped the charts last quarter. Choose funds that stay stable across time.”

Long-term SIP investors should therefore focus on:

* Consistency of performance
* Risk management
* Market-phase durability
* Quality of fund management

This approach helps build wealth steadily while avoiding frequent switches, emotional decision-making, and return-chasing traps that many investors fall into.

Important Investment Disclaimer

The information presented here is for general awareness and should not be considered investment advice. Mutual fund investments are subject to market risks. Always consult a qualified financial advisor before making investment decisions.