SIP (Systematic Investment Plan) is the most popular name in the mutual fund industry, be it investor, advisor or fund house is concerned. The beauty of SIP is, inculcating the habit of disciplined investment, no doubt. In India, most of the mutual fund investors are retail investors and they can invest systematic only and SIP book size is ever growing.
Unfortunately, many investors as well as advisors, still believe SIP is the sure shot success or even if you have money better to invest in a staggered manner, rather than investing in lumpsum. As far as my reading goes, instead of looking at whether SIP is better or lump sum better, it is more of the fund availability when the investor is investing.
The point, I would like to emphasize here is, do not believe only SIP is better or it will create miracles. I have taken the last 5 years return of small cap and midcap funds which are very popular 5 years before and let’s look at how those funds performed in the past 5 years as lump sum as well as SIP.
|Lump sum Returns in the last 5 Years in Small & Midcap Funds|
|Date||DSP Small cap||Franklin Smaller Co||Reliance Small cap||L&T Emerging||HDFC Midcap|
|Abs. Gain in %||70.53%||56.02%||81.00%||81.27%||64.96%|
|CAGR. Gain in %||11.27%||9.30%||12.60%||12.63%||10.53%|
|SIP Investments in the last 5 Years in Small & Midcap Funds|
|SIP in 60 Months||₹ 6,00,000||₹ 6,00,000||₹ 6,00,000||₹ 6,00,000||₹ 6,00,000|
|Current Value||₹ 6,08,599||₹ 6,18,758||₹ 6,79,961||₹ 6,92,760||₹ 6,69,188|
|Abs. Gain in %||1.43%||3.13%||13.33%||15.46%||11.53%|
|CAGR. Gain in %||0.05%||0.10%||0.40%||0.46%||0.35%|
Purpose of this article is to understand there is no fool proof method for investing. When we constantly look in to DATA we will find what works and what not. No point in following the strategy for all the time. Biggest myth is Doing Nothing is Good, when everything is dynamic Buy & Hold and not touching the portfolio will only affect the growth of the portfolio. It is high time to take action against the laggards rather than waiting for miracles to happen..
|Fund Name||Launch Date||NAV Date||Current||Total||SIP||Investment||SIP value as on||XIRR||CAGR|
|DSP Small Cap||14-06-2007||16-08-2019||48.79||12,473.86||60||6,00,000||6,08,599||0.56||0.05%|
|Franklin India Smaller Co||13-01-2006||16-08-2019||47.042||13,153.32||60||6,00,000||6,18,758||1.22||0.10%|
|Reliance Small Cap||16-09-2010||16-08-2019||35.1526||19,343.11||60||6,00,000||6,79,961||4.96||0.40%|
|L&T Emerging Businesses||12-05-2014||16-08-2019||21.396||32,378.03||60||6,00,000||6,92,760||5.7||0.46%|
|HDFC Mid-Cap Opportunities||25-06-2007||16-08-2019||49.348||13,560.60||60||6,00,000||6,69,188||4.32||0.35%|
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