Every Nifty 500 SIP Started Since January 2022 Is Lagging an 8% Fixed Deposit

A striking analysis comparing broad-market Indian equities to conservative fixed-income instruments has revealed an uncomfortable milestone for retail mutual fund investors: every single monthly Systematic Investment Plan (SIP) initiated in the Nifty 500 Total Return Index (TRI) since January 2022 is currently trailing a standard 8% bank fixed deposit (FD).

According to data compiled from NSE India as of October 1, 2026, across 57 distinct monthly start cohorts spanning January 2022 to September 2026, 57 out of 57 SIPs are worth less than an identical recurring deposit yielding 8% per annum compounded monthly.

Dissecting the Numbers: Nominal Gains vs. Real Lag

The simulation tracks an investor depositing ₹10,000 on the 7th of every month (or the subsequent trading session) into the Nifty 500 TRI benchmark, comparing the outcome against an equivalent ₹10,000 monthly allocation into an 8% fixed deposit. Both calculations reflect pre-tax figures and exclude fund management expense ratios.

Key Findings From the 57 Cohorts:

• The Earliest Cohort (January 2022): An investor who started investing in January 2022 contributed ₹5.70 lakh across 57 instalments. As of October 1, 2026, the equity portfolio stands at ₹6.82 lakh, reflecting an absolute gain of ₹1.12 lakh. However, despite this positive nominal return, the investment is still ₹8,467 behind the compounded value of the 8% FD.
• The Worst-Hit Cohort (December 2023): The widest underperformance gap occurred for SIPs initiated in December 2023, near a period of elevated market exuberance. As of October 1, 2026, that SIP portfolio trails the fixed deposit benchmark by ₹39,797.
• Near-Term Compression (2025–2026): For cohorts started more recently in late 2025 and 2026, the deficit versus the FD narrows in absolute rupee terms simply due to the shorter compounding window, yet remains consistently below the zero-line break-even mark.

Why Broad Market SIPs Fell Behind

The prolonged underperformance highlights the mechanics of rupee-cost averaging when an index enters an extended consolidation cycle. Following the all-time peaks established around late September 2024, Indian headline benchmarks entered a challenging phase characterized by foreign institutional investor (FII) outflows, earnings normalization, and global geopolitical stress.

While the headline "Mutual Funds Sahi Hai" campaign has driven domestic monthly SIP inflows to record levels exceeding ₹26,000–₹32,000 crore, SIP returns are ultimately tied to index trajectory. Rupee-cost averaging reduces the impact of volatility by acquiring units at lower valuations, but it cannot manufacture alpha if the broader market benchmark remains stagnant or declines over an intermediate three-to-four-year span.

Simultaneously, the comparative bar was raised as Indian commercial banks and non-banking financial companies offered peak fixed deposit interest rates hovering around 7.5% to 8.5% over the past two years, giving fixed-income investors consistent, compounding accruals without volatility.

The Tax and Long-Term Horizon Caveats

Financial planners emphasize that investors should not draw premature conclusions from a medium-term snapshot:

Factors Investors Must Keep in Mind:

• Taxation Asymmetry: Fixed deposit interest is taxed on an accrual basis at an investor’s marginal income tax slab rate every financial year. In contrast, equity mutual funds benefit from capital gains taxation deferred until redemption, where long-term capital gains (LTCG) above ₹1.25 lakh are taxed at 12.5%.
• Cyclical Nature of Equities: Historical rolling-return studies on the Nifty 50 and Nifty 500 show that periods of subdued 3- to 5-year returns have historically reset market valuations and laid the groundwork for stronger subsequent multi-year compounding cycles.
• Active vs. Passive Divergence: While the broad passive Nifty 500 TRI benchmark lagged an 8% hurdle, actively managed diversified funds in multicap, midcap, and value categories have shown substantial divergence and alpha generation over the same timeframe.

For retail investors, the chart serves as a potent reminder that equity mutual funds carry intermediate market risk and do not guarantee an uninterrupted equity risk premium over fixed-income instruments within three- to five-year horizons.

Tags: NSE India Nifty 500 TRI Nifty 50 AMFI SEBI