Busting the SIP Myth: Why Flat Markets are a Goldmine for Equity ETF Investors
Sun Jul 19 2026
A recent viral post misguided investors by claiming poor SIP returns over two decades. This analysis clarifies why flat markets are precisely where Systematic Investment Plans, especially in equity ETFs, quietly build wealth through rupee-cost averaging.
According to Livemint - Money, a recent viral social media post has been circulating, falsely claiming that Systematic Investment Plans (SIPs) delivered a meagre 6.7% return over two decades. This assertion is based on a flawed calculation and overlooks the fundamental benefits of SIPs, particularly during periods of market stagnation. For Indian ETF investors, understanding the true power of SIPs, especially when equity markets appear flat, is crucial for long-term wealth creation.
What Happened
The viral post suggested a low return from SIPs, leading some investors to question the efficacy of this popular investment method. The core of the misconception lies in how returns were calculated, likely ignoring the concept of rupee-cost averaging. In a SIP, a fixed amount is invested at regular intervals, regardless of market conditions. This strategy mandates buying more units when prices are low and fewer units when prices are high, averaging out the purchase cost over time. The post's argument seemingly failed to account for this critical aspect, leading to an inaccurate representation of SIP performance over a prolonged period.
Why It Matters for ETF Investors
For investors utilising ETFs in India, particularly those focused on broad market indices or specific sectors, the debunking of this SIP myth is highly significant. ETFs, much like mutual funds, benefit immensely from the SIP approach. During flat or volatile market phases, often perceived negatively, SIPs in ETFs quietly do their best work. When the market falls or remains range-bound, each SIP instalment buys more ETF units. This accumulation at lower average prices can lead to substantial gains when the market eventually recovers and trends upwards. This phenomenon, known as rupee-cost averaging, is a cornerstone of prudent long-term investing using SIPs.
Consider a scenario where the Nifty index (and consequently, Nifty-tracking ETFs like AONENIFTY or AXISNIFTY) remains stagnant for several years. An investor making regular SIP contributions would steadily accumulate units at various price points, with a higher proportion of units acquired during dips. When the market eventually breaks out of its stagnation, the large number of units purchased at lower average costs translates into amplified returns. This makes SIPs in [[equity]] ETFs a powerful tool for navigating market cycles rather than trying to time them, a notoriously difficult and often unsuccessful endeavour for retail investors. Investors can use our [[/screener]] to find ETFs that align with their long-term SIP strategy.
Affected ETFs
While the article doesn't name specific ETFs, the principle of SIPs applies universally to all equity-oriented ETFs. ETFs tracking broad market indices are particularly relevant here, as their underlying portfolios tend to reflect the general market sentiment. Examples include:
AONENIFTY: An ETF tracking the Nifty 50, representing large-cap Indian equities.
AXISNIFTY: Another ETF providing exposure to the Nifty 50 index.
AXSENSEX: An ETF that mirrors the performance of the BSE Sensex, another key Indian large-cap index.
MID150BEES: This ETF tracks the Nifty Midcap 150 index, benefiting from SIPs during phases of mid-cap consolidation.
BSE500IETF: An ETF offering broad exposure to the top 500 companies listed on BSE, encompassing large, mid, and small-cap segments.
These ETFs, by their very nature, are ideal vehicles for SIPs due to their diversification and low expense ratios. Regular investments into these funds allow investors to partake in the long-term growth story of the Indian economy without the need for active trading decisions.
Sector / Classification Impact
The impact primarily falls under the
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