SIP investments: Market rewards SIPs in the long run


India’s mutual funds (MF) industry has launched a diverse range of investment products in recent years. While this has provided more investment options through the MF route, beginners often find it confusing to choose the right schemes. Investment in schemes focussed on broad market indices through systematic investment plans (SIP) comes in handy as a starting point. ETIG offers a comparison of the performance of such schemes with traditional investment avenue gold in the form of gold exchange-traded funds (ETFs) in five-year, 10-year and 15-year periods. For simplicity, we have considered an investment of Rs10,000 per month as a SIP in these schemes.

1. SIP Investments

Month SIP contribution in Rs crore
Nov-21 11,010
Dec-21 11,310
Jan-22 11,520
Feb-22 11,440
Mar-22 12,330
Apr-22 11,860
May-22 12,290
Jun-22 12,280
Jul-22 12,140
Aug-22 12,690
Sep-22 12,980
Oct-22 13,040
Nov-22 13,306
Source: AMFI

2. Inflows in Gold ETFs

3. SIP returns in major indices and Gold


4. Why Midcap Index SIPs have outperformed
SIPs in the Nifty Midcap 150 TRI has fetched the highest growth in each of the three time periods. Fund managers find it easier to find alpha or excess returns in midcap stocks since companies in this segment with healthy balance sheets and strong business models tend to fare better as demand improves in the economy. Since such companies are in the growth phase, the interest of retail and institutional investors in them sustains over the longer horizon.

5. What you should do

Investors should strictly maintain a diverse portfolio by investing across major indices. Even other schemes such as the Nifty LargeMidcap 250 TRI, the Nifty 50 TRI, and the Nifty Smallcap 250 TRI have given 15-20% returns in the long term. This shows that an investor would not have lost much if she had invested in these indices regularly through the SIP route over a longer horizon. Distributors advise that in bearish market phases, funds based on benchmark indices such as the Nifty LargeMidcap 250 TRI and the Nifty 50 TRI tend to cap the downside of a portfolio’s returns as they have large-sized companies which tend to fall lesser than midcaps.



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