Market Corrections And SIP

The recent plunge in the equities has led to returns from Mutual Fund SIPs turning negative for the last 12-24 months. However Investor awareness initiatives by AMC’s and Advisors have helped create a positive environment,SIP inflows hit an all-time high of Rs 7,700 crore in September, which reflects enthusiasm of retail investors to participate in equity markets and benefit from the fall.

What should you do if SIP returns are negative?

SIP mode of investing in equity mutual funds is for long term wealth creation. A fall in equities is not a reason for investors to discontinue or stop their SIP’s. SIP’s should be linked to your goals, and if you are investing in equity mutual funds , the time horizon for your investments should be between 5-7 years.In fact falling markets are the best time to continue your SIP’s and TOP it up as higher units will get accumulated at lower NAV’s.

Should I change my mutual fund scheme if the returns have turned negative?

Ideally one should judge a scheme after staying invested for at least three to five years . However, if the scheme happens to under perform its benchmark even over a three-year period, then investors could take a closer look at it and move to another scheme which has a better performance. Alternatively, if the mandate of the scheme has changed, or the fund manager has changed, they could discuss this with an advisor or any such professional before arriving at a decision.

What is SIP Top Up ?

SIP Top up is a facility that allows an investor to increase monthly SIP amount as desired. SIP Top up facility can increase overall SIP returns in falling markets, as Investor is able to purchase more units at lower NAV.