Chasing Top Funds? Your SIP Returns May Suffer
Picking last year's best mutual fund sounds smart, but experts say it often backfires. Past performance rarely repeats, and frequent switching adds costs while breaking the power of compounding. Here's what to do instead.
Switching funds every year costs you ₹1,200–₹2,500 in exit loads alone — that's 4 months of chai!
Last year's top mutual funds fail to repeat their rank the next year
Key Takeaways
Review your fund's 5-year and 10-year rolling returns — not just the 1-year snapshot shown in ads or rankings.
Check your portfolio for funds you switched into based on recent performance and assess whether your original goal still holds.
Stick to your SIP schedule through market ups and downs — pausing or redirecting based on rankings breaks rupee-cost averaging.
Picking last year's best mutual fund sounds smart, but experts say it often backfires. Past performance rarely repeats, and frequent switching adds costs while breaking the power of compounding. Here's what to do instead.
Here's what happened: Most mutual funds that top annual rankings fail to maintain that position the following year due to changing market cycles.. Investors who switch to last year's winner often exit just as that fund slows down and miss the next growth phase.. Frequent fund switching triggers exit loads (up to 1%) and short-term capital gains tax, quietly eating into your returns..
What you should do: Review your fund's 5-year and 10-year rolling returns — not just the 1-year snapshot shown in ads or rankings.. Check your portfolio for funds you switched into based on recent performance and assess whether your original goal still holds.. Stick to your SIP schedule through market ups and downs — pausing or redirecting based on rankings breaks rupee-cost averaging..
Pro tip: A fund that delivered 45% in one year likely took concentrated sector bets — when that sector corrects, losses can be equally sharp. Consistency beats glory.
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- [1]“Should you invest in last year’s top mutual fund? Experts warn against this common mistake” mint - money · 25 Jun 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.