Viral 6.7% SIP Return Claim Built on Faulty Math
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- Dhirendra Kumar, founder and CEO of Value Research, traces the viral 6.7% SIP return claim—viewed more than 500,000 times on X—to an unreviewed paper on ArXiv, which does not conduct peer review
- The flawed calculation annualized 20-year total SIP growth as though every rupee had remained invested for the full period, while in reality each instalment was invested for about half that time on average
- Applying XIRR, the appropriate method for investments made at different points in time, across the same period and various indices yields annual returns of 10-13%
- Value Research's database of 290 diversified equity funds with at least five years of history shows every single fund delivered positive SIP returns, with nearly 200 exceeding 10% annually and the weakest still returning just under 6%
- Kumar concedes investors do underperform because they invest aggressively in bull markets and abandon SIPs during downturns—but frames this as a critique of investor behaviour, not of SIPs as a product
- Indian markets have been broadly flat for nearly two years, the worst environment for reported SIP returns and paradoxically the best for accumulating units at lower prices
Why it matters: Kumar's firm charges no commission on SIPs, so his pushback isn't self-interested advice—the risk is that millions of retail investors abandon a low-cost, behavioural-discipline strategy on the strength of a math error amplified by 500,000-plus social media views precisely during a flat market when SIPs accumulate the most units.
