![]() Moreover, uneven investments in a particular scheme can disrupt your asset allocation plan. Likewise, if you have opted for a Smart SIP wherein a lower amount gets invested in every instalment when the market is in overvalued zone, it can result in your investment falling short of the targeted amount if the phase continues for an extended period of time. If the market is under a prolonged bear phase, a higher sum will get debited for each SIP contribution, which can put a burden on your cash flows. Notably, the total amount invested was higher as well.īeing a relatively complex investment strategy, Smart SIP may not be suitable for most retail investors, especially new and low-risk investors. (Note: The figures are for illustration purpose only)Īs we can see in the illustration above, Smart SIP investment generated around Rs 15,000 more gains than the traditional SIP. Table: Difference between SIP and Smart SIP On the other hand, whenever the market rises above the 52,000 level, the SIP contribution for those months will be half of the regular SIP contribution.ĭo note that the facility to reduce the SIP contribution during market highs may not be available with every mutual fund house that offers the Smart SIP facility. Rs 10,000 instead of Rs 5,000, whenever the market level falls below the 52,000 level. If you opt for the Smart SIP, the monthly contribution deducted will be double of the regular SIP amount i.e. ![]() Let's assume that the fair level of the equity market is at 52,000. In the below example, the regular month SIP amount is Rs 5,000. Join FREE Today to get 'Daily Wealth Letter' and Exclusive Updates on Mutual Funds The SIP amount will remain unchanged when markets are neutral. On the other hand, Kotak Mutual Fund's Smart SIP facility allows you to reduce your SIP instalment to half of the base amount when the market valuations are expensive and double when market valuations are cheap. (fixed amount to be invested per instalment * number of instalments including the current instalment) - market value of the investments already processed through Flex SIP In the case of schemes of Axis Mutual Fund and HDFC Mutual Fund, the amount to be invested in each instalment will be higher of: Furthermore, the facility is available only under the Growth option of equity schemes. This facility is only available for open-ended equity-oriented mutual fund schemes. It is important to note that the features/strategies of the Smart SIP facility related to the maximum amount that will be invested in each instalment may differ from one fund house to another. The trigger level is usually based on an algorithm that determines whether the market is cheap or expensive.Īxis Mutual Fund, HDFC Mutual Fund, and Kotak Mutual Fund are among fund houses that offer the Smart SIP facility. Similarly, some fund houses also allow a lower amount to be invested if the markets turn expensive. additional amount will get invested compared to the regular SIP. For instance, when the market goes down below a pre-determined level or a key ratio like P/E, the Smart SIP option kicks in i.e. Smart SIP, also known as Flex SIP, allows you to vary your SIP contributions based on the movement of pre-defined criteria such as index level, PE ratio, etc. Definitive Guide To Successful Equity Investing.10 Steps to Select Winning Mutual Funds.The Complete Guide to Public Provident Fund (PPF).Your Comprehensive Guide to Tax Planning 2019.How To Become A Millionaire With Mutual Fund.Understanding Mutual Funds - Equity, Debt, and Gold.Your Guide To Build An All-Season Mutual Fund Portfolio.Guide To Value Investing With Mutual Funds.Guide to Long Term Wealth Creation With Equity Mutual Funds.How To Define Asset Allocation And Invest Smartly.Guide To Plan Your Financial Goals With Mutual Funds.10 Basic Tips To Pick Right Mutual Funds For Your Portfolio.The Complete Guide to Public Provident Fund (PPF) – Edition 2021.Your Definitive Guide To Buy Life Insurance.4 Best Large Cap Mutual Funds to Invest in 2022.
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