Focused Funds Fail 85%: Is Your SIP Underperforming?

Most focused mutual funds have disappointed SIP investors over 5 years. Only 4 schemes crossed 15% returns, while some delivered as low as 7.92%. Here's what this means for your SIP and whether you should stay or switch.

Here's what happened: Only 4 focused mutual fund schemes delivered 15% or more in 5-year SIP returns out of the entire category, with the top performer crossing 18%.. The worst-performing focused fund in the same period returned just 7.92% — barely above long-term FD rates and well below inflation-adjusted real returns.. Focused funds hold a maximum of 30 stocks by SEBI rule, making returns highly sensitive to stock selection — which explains the massive performance gap across schemes..

What you should do: Log into your mutual fund app or CAMS/KFintech portal and check the 5-year XIRR of your focused fund — anything below 12% warrants a serious review.. Compare your focused fund's 5-year return against its benchmark index and against a low-cost Nifty 50 or Nifty 500 index fund before deciding to stay invested.. If switching, use the SIP pause or STP (Systematic Transfer Plan) route to move funds gradually to a better-performing scheme and avoid a large taxable redemption in one go..

If your focused fund has underperformed its own benchmark for 3 consecutive years — not just peers — that's a clear red flag to exit, not just review.

For readers weighing their credit and loan options, our personal loan guide and CIBIL score resources put this update in context.