The most important factor for a long-term investor is the performance of his investment. As SIPs have become widely accepted as the right choice of investment into mutual funds, the question arises about what the performance of the funds in the long run, for periods over five years, is.

At Sumufa, we wanted to know how our Strategic Selection process compared to the performance of SIPs in small cap mutual funds. We tested this process for a period of five years, from 13 July 2020 to 13 June 2025. This has revealed a significant disparity in returns across schemes, reinforcing the importance of Strategic Selection in wealth creation. You can check out the comparison data in Sumufa's SIP Comparison sheet, which also shows the Strategic Selection Data.

According to data for the 19 small cap mutual funds that existed as on 13 July 2020, investors who contributed ₹5,000 monthly over the last five years — a total investment of ₹3,00,000 — saw their portfolios grow to markedly different levels depending on the fund they chose. The best performer as on date, Bandhan Small Cap Fund, delivered a corpus of ₹6,41,419, while the lowest, SBI Small Cap Fund, grew to just ₹4,85,666. The average value across all funds stood at ₹5,50,223, which was higher than the value for 9 funds.

A strategically selected mix of funds based on Sumufa’s Data Management Strategies would have resulted in a corpus of ₹5,84,015 — nearly ₹99,000 higher than the lowest-performing option, and around ₹34,000 above the average. This puts Sumufa’s wealth creation strategy better than SIP in 74% of the funds in this category.

These results underscore a critical fact for retail investors: fund selection has a direct and measurable impact on long-term wealth creation. With small cap funds known for their high return potential but equally high volatility, thoughtful strategic selection becomes even more important.

It is clear that though the SIPs offer the benefit of disciplined investing and rupee-cost averaging, the chance of getting stuck with a low-performing scheme is more likely. This data clearly establishes the supremacy of Strategic Selection over simple SIPs. Thus, in addition to discipline and averaging, one needs strategic selection to not only beat the average but also emerge as one of the leading wealth creators within the category.

As an investment vehicle, equity mutual funds provide the best risk-return advantage for periods over 10 years. It is time that the investors look beyond SIPs to create long-term wealth. Building a low-risk, high-return portfolio in equity mutual funds will require Strategic Data Management, something unique that we offer.