Market volatility often makes investors anxious, and many start questioning whether they should continue their Systematic Investment Plan (SIP) during a downturn. However, financial experts say that stopping SIP investments due to short-term market declines may not be a wise decision. Historical market trends show that long-term investing through SIPs can generate substantial wealth even after major market crashes.
In fact, several mutual funds have delivered impressive long-term returns despite witnessing severe market corrections. One such example is the Kotak Infrastructure and Economic Reform Fund, which has rewarded disciplined investors over the years.
The recent fall in the stock market has made many investors nervous. Some are even considering stopping their SIP contributions. However, market experts emphasize that investors with long-term horizons—such as 5, 10, or 15 years—should not worry too much about short-term fluctuations.
History has repeatedly shown that markets tend to recover after downturns. Two major examples include:
The 2008 global financial crisis, which caused a sharp fall in equity markets worldwide
The 2020 COVID-19 pandemic, which led to a sudden market crash followed by a strong recovery
Investors who remained invested during these periods often benefited significantly once markets rebounded.
A striking example of the power of long-term investing comes from the Kotak Infrastructure and Economic Reform Fund, a scheme offered by Kotak Mutual Fund.
If an investor had started a monthly SIP of ₹10,000 in this fund from its launch, the total investment over time would have been around ₹21.5 lakh. Today, that investment would have grown to more than ₹1 crore, demonstrating the potential of disciplined investing over the long term.
This growth highlights how consistent investing combined with compounding can significantly increase wealth, even when markets experience temporary declines.
The Kotak Infrastructure and Economic Reform Fund was launched in February 2008, just before one of the biggest global financial crises. Since then, the fund has navigated several market cycles.
Despite these challenges, the scheme has delivered approximately 15% compound annual growth rate (CAGR) since inception. Over the past 18 years, the fund has experienced multiple phases of market volatility, including the 2008 financial crisis and the 2020 pandemic-driven crash.
Investors who panicked and stopped their SIP during these difficult phases may have missed out on significant long-term gains.
This mutual fund primarily focuses on companies related to the infrastructure sector, which includes industries such as:
Roads and highways
Bridges and ports
Airports and railways
Power generation and distribution
Water supply projects
Telecommunications infrastructure
The scheme’s Assets Under Management (AUM) stand at around ₹2,353 crore.
Currently, the fund is managed by Nalin Rasik Bhatt, who has been overseeing the scheme since October 2023.
The fund’s primary benchmark is the Nifty Infrastructure Total Return Index (TRI), while the Nifty 50 TRI serves as an additional benchmark.
Over the long term, the fund has delivered returns significantly higher than its benchmark index. Compared with the infrastructure index, the scheme has generated approximately 6% higher returns, highlighting its strong performance relative to the broader sector.
The fund invests mainly in equities and equity-related securities of infrastructure-focused companies, aiming to capture growth opportunities in India’s expanding infrastructure sector.
While the fund’s performance has been impressive, financial advisors caution investors against making decisions based solely on past returns.
Experts note that:
Past performance does not guarantee future returns
Thematic funds that focus on a single sector can involve higher risk
Investors should carefully assess their financial goals and risk tolerance
They recommend consulting a qualified financial advisor before making investment decisions.
The performance of long-term mutual fund investments highlights an important lesson: short-term market volatility should not discourage disciplined investors.
SIPs are designed to help investors benefit from market fluctuations through rupee cost averaging and long-term compounding. Staying invested through market cycles often proves more rewarding than trying to time the market.
For investors planning long-term wealth creation, experts suggest maintaining consistency in SIP investments rather than reacting to temporary market corrections.
