Amid unpredictable market movements, investors increasingly consider the stability and discipline offered by SIPs (Systematic Investment Plans). However, besides knowing what is SIP, understanding the average return on SIP is also vital so that you can set realistic expectations.
Why Understanding SIP Returns Matters for Long-Term Investors
SIP investing promotes financial discipline by encouraging regular contributions regardless of market volatility. But more importantly, understanding the average return on SIP helps you:
- Set achievable financial goals
- Avoid disappointment from unrealistic expectations
- Compare fund options based on historical and risk-adjusted performance
Long-term investors who comprehend how SIP returns compound over decades tend to make better investment decisions and stay the course during market corrections.
SIP as a Wealth-Building Tool in India
SIPs have emerged as one of the most effective wealth-building tools for retail investors in India. The low entry barrier (as low as ₹500 per month), automatic investment mechanism, and the power of compounding make SIPs among the most popular choices. Especially in equity mutual funds, SIPs help average out costs and navigate market volatility—key factors in delivering sustainable returns over time.
What is the Average Return on SIP?
Before diving into numbers, it’s essential to understand what we mean by average return on SIP and how it differs from traditional return calculations.
Definition of Average Return in SIP Investing
The average return on SIP refers to the percentage of gains your regular investments have earned over a certain period. Unlike lump sum investing, SIP returns reflect the impact of periodic investments across fluctuating NAVs, making return calculations slightly more complex.
How SIP Returns Are Calculated (CAGR vs IRR vs XIRR)
To truly assess the average return on SIP, it’s essential to understand the different methods used to calculate it—each with its relevance and accuracy.
CAGR (Compound Annual Growth Rate) applies to lump sum investments and doesn’t suit SIPs well.
IRR (Internal Rate of Return) assumes evenly spaced investments—ideal for monthly SIPs.
XIRR (Extended Internal Rate of Return) is the most accurate for SIPs as it considers irregular cash flows and varying dates.
Thus, when discussing the average return on SIP, XIRR is typically the benchmark used by share market advisory firms or experts.
Average Return on SIP in India: Historical Data
To set realistic expectations, it’s helpful to look at how SIPs have performed in India over time—across both bull and bear markets—backed by historical data from the past decade.
Average Return on SIP in the Last 10 Years
Based on data from the Association of Mutual Funds in India (AMFI) and various mutual fund houses, the average return on SIP in India over the last 10 years ranges between 11% and 14% for equity mutual funds. Hybrid funds offer slightly lower returns (~9–11%), and debt funds even lower (~6–8%).
SIP Return Trends During Bull vs Bear Markets
In general, SIP returns tend to show contrasting behavior across market cycles. During bull markets, when stock prices rise steadily, SIPs benefit from consistent NAV appreciation, leading to higher returns over time. Conversely, in bear markets, when prices decline, SIPs accumulate more units at lower NAVs—resulting in lower short-term returns but potentially higher long-term gains once the market recovers. This averaging effect helps cushion volatility, making SIPs a resilient investment strategy across both market phases.
However, long-term SIPs tend to smoothen these fluctuations, leading to a more stable average return on SIP.
Here’s a look at the performance of popular equity fund SIPs for 10 to 20 years:
SIP Returns from Popular Equity Funds
| Fund Name | 10-Year Return | 15-Year Return | 20-Year Return |
| HDFC Flexi Cap Fund | 14.2% | 13.5% | 15.8% |
| SBI Bluechip Fund | 13.0% | 12.4% | 14.6% |
| Axis Long-Term Equity Fund | 12.7% | 12.1% | – |
| ICICI Prudential Value Discovery | 13.4% | 14.2% | 16.2% |
| Franklin India Prima Fund | 12.5% | 12.8% | 14.7% |
(Sources: Economic Times, Business News Today, Money Control)
Average Return on SIP for 15 Years
For long-term investors, a 15-year investment period gives a clear picture of how SIPs perform through different market conditions. Over this time, SIPs in good equity mutual funds usually offer steady returns that beat inflation—often in double digits.
1. Performance of SIPs in Long-Term Mutual Funds
Over 15 years, equity SIPs have historically delivered average returns between 12% and 14%, depending on the fund category and market conditions. This sustained performance reflects the benefits of compounding, rupee-cost averaging, and the ability of mutual fund managers to navigate economic ups and downs effectively. Mid-cap, flexi-cap, and value-oriented funds often outperform over longer durations, provided the investments remain uninterrupted.
2. How Consistency Beats Market Timing Over 15 Years
Attempting to time market entry and exit points is a risky strategy, even for seasoned investors. In contrast, a disciplined SIP approach eliminates emotional decision-making and leverages market volatility to an investor’s advantage. By investing consistently, investors accumulate more units during downturns and benefit from their growth during recoveries. This long-term discipline typically outperforms erratic lump-sum investing, especially over 15 years.
Average Return on SIP for 20 Years
1. Historical Examples of SIP Performance Over 20 Years
Historical data reveals that equity SIPs have delivered 13–16% annually over 20 years, especially in diversified and flexi-cap funds. That’s the power of long-term investing: it not only evens out market noise but maximizes the benefit of compounding.
2. Impact of Compounding on Long-Term SIP Returns
Compounding plays a big role in boosting SIP returns over 20 years. For example, a ₹5,000 monthly SIP at 14% can grow to over ₹75 lakh in 20 years—while the same SIP gives only about ₹30 lakh in 10 years. That’s the power of time.
What is the Average Expected Rate of Return on SIP?
The average expected rate of return on SIP depends on several factors—most importantly, the type of mutual fund chosen, including:
Equity, Hybrid, and Debt Fund SIP Averages
- Equity Mutual Funds: These SIPs invest your money mainly in shares of companies, are known for their high growth potential, and are ideal for long-term goals.
- Hybrid Mutual Funds: These funds invest in equities and fixed-income instruments, offering a balanced approach. These are suitable for moderate-risk investors.
- Debt Mutual Funds: These low-risk funds invest in fixed-income securities like government bonds and corporate debt and offer stability with limited growth.
These averages represent historical trends. The actual average expected rate of return on SIP depends on the market cycle, fund type, and investment duration.
Risk-Adjusted Return Expectations Based on Fund Type
Every mutual fund type offers a different return potential based on the level of risk it carries:
- Equity funds may deliver higher returns, but they come with higher short-term volatility. Investors need to stay invested longer to balance out market ups and downs.
- Hybrid funds provide more stable returns by spreading investments across equity and debt. They’re ideal for those who prefer a balance between growth and safety.
- Debt funds are the least volatile but also offer lower returns. They work well for short- to medium-term goals or investors with a low risk appetite.
When choosing among the types of mutual funds in India, investors must consider their risk appetite and investment horizon.
Factors That Affect SIP Returns
Several key factors influence how your SIP performs over time. These are:
1. Market Volatility and Timing
Short-term market corrections can reduce returns, but long-term SIPs tend to average out these fluctuations.
2. Fund Selection and Risk Category
Investing in consistently performing funds with lower downside risk is key to a better average return on SIP.
3. Duration and Consistency of Investment
Longer durations and consistent contributions unlock the true potential of compounding.
4. Expense Ratio and Exit Load
These fees can eat into returns. Always factor them in when calculating your net returns.
How to Use SIP Calculators to Estimate Returns
The SIP calculator is a simple tool for estimating the future value of your investments based on your monthly amount, expected return, and investment duration.
Understanding Expected Value Based on Amount, Duration, and Rate
SIP calculators let you input your monthly amount, expected return, and duration to estimate the future value. It simplifies goal-based planning.
Tools to Use for SIP Return Calculation
- Online SIP calculators from fund houses or portals
- Excel formulas using XIRR
- Mobile apps
These tools help project the average return on SIP and plan accordingly.
Common Myths About SIP Returns
Despite their popularity, SIPs are often misunderstood—let’s clear up some common myths that can mislead investors about how SIP returns work.
1. SIPs Always Guarantee 12–15% Return
No, returns vary based on fund type and market conditions. SIP is a mode of investing—not an assured return product.
2. SIP is Risk-Free Because It’s Monthly
While SIPs reduce volatility, they still involve market risk, especially in equities.
3. Longer Duration = Always Higher Return
Longer durations increase the probability of better returns but do not guarantee it. Fund choice and market cycle still matter.
Conclusion
Key Takeaways on Average SIP Returns Over 10, 15, and 20 Years
Over a 10 to 20-year period, SIPs have consistently proven to be powerful tools of investment. The average return on SIP tends to improve with time—typically ranging from 11–14% over 10 years, 12–14% over 15 years, and up to 15–16% over 20 years, especially in well-managed equity mutual funds. Longer durations lead to better compounding benefits and more stable returns.
Focus on Consistency, Fund Choice, and Time — Not Just Returns
Rather than chasing high returns or trying to time the market, focus on investing consistently, choosing funds that match your risk profile, and staying invested for the long haul. SIPs reward patience, not predictions—and the longer you stay committed, the stronger your financial outcomes will be.
Most importantly, before deciding to invest, consult reliable financial advisors who can guide you through all the nuances of SIPs or even what SIFs or any other financial instrument are.
FAQs on Average Return on SIP
What is the average return on SIP in India over 10 years?
It ranges from 11% to 14% for equity mutual funds.
What is the expected return on SIP for 15 or 20 years?
You can expect 12–14% for 15 years and 14–16% for 20 years, especially in diversified equity funds.
How are SIP returns calculated?
SIP returns are best calculated using the XIRR method, which accounts for varying investment dates and amounts.
Can SIP give a 15% return annually?
Yes, some equity SIPs have historically delivered 15% or more in strong market phases—but it’s not guaranteed.
Is SIP return fixed, or does it vary?
SIP returns vary based on fund performance, market cycles, and investment duration.
Which funds have delivered the highest SIP returns historically?
ICICI Pru Value Discovery, HDFC Flexi Cap, and Franklin India Prima Fund have offered some of the best SIP returns over 15–20 years.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
