Dealing With Loss-Making SIP
Dalal Street Investment Journal|November 23, 2020
Investment through SIPs is considered one of the most convenient ways of investing in mutual funds and creating long-term wealth. It enforces disciplined investing among investors and helps them to benefit out of rupee cost averaging. Nonetheless, there are situations where SIPs might not be the ideal investment route. The article explains why

What is ‘synecdoche’? It refers to the practice of using a part of something that stands in for the whole thing. For example, ‘wheel’ is referred many times to represent car or automobile. Similarly, SIP is many times used by investors for investment in mutual funds. Although SIP is only one of the ways to invest in mutual fund schemes, it is inadvertently used to indicate investment in mutual funds. If we check on the internet for the use of this word, we find that SIP is more extensively searched than ‘mutual fund investment’ or ‘mutual fund’ itself. The graph below shows the Google search trends in India for the last three years ending October 2020.

SIP Returns

When a word connotes so much about an asset, its return definitely will have a direct bearing on the attractiveness of the asset. The graph below shows the return distribution of SIPs in equity mutual funds over different periods. On an average, the SIP return in the last 3-5 year period has been around 6 per cent. If we exclude sectoral funds such as IT and pharmaceutical, the average returns will drop further.

The graph indicates that inflows slowed down in mutual funds as returns from SIPs started showing negative return. Besides, as the equity market started gaining, investors who had parked their funds 2017 witnessed some gain in their portfolio and hence started booking profits and exiting from the fund. October 2020 is the fourth consecutive month when we have seen net outflows from equity-dedicated mutual funds. For October the net outflow from the equity-dedicated funds was to the tune of Rs 2,724.95 crore. A monthly SIP inflow that was to the tune of Rs 8,641 crore in March 2020 slipped down to Rs 7,800 crore in October.

Dealing With Loss-Making SIP

Continue reading your story on the app

Continue reading your story in the magazine

MORE STORIES FROM DALAL STREET INVESTMENT JOURNALView All

The Art Of Asset Allocation

Mutual Fund Distributor

3 mins read
Dalal Street Investment Journal
January 04, 2021

George Joseph CEO and CIO, ITI Mutual Fund

In this exclusive interview, George Joseph, CEO and CIO, ITI Mutual Fund, expresses his opinion about the status of the MF sector in the new scenario post the pandemic and how his fund house is strategizing future investments

5 mins read
Dalal Street Investment Journal
January 04, 2021

LUX INDUSTRIES IN A ‘COMFORTABLE' POSITION

Some of the strengths of Lux Industries include rich sectoral experience, extensive distribution network, substantial cost leadership, proprietary manufacturing ability, vast product variety and sharp focus on the mid-price segment

5 mins read
Dalal Street Investment Journal
January 04, 2021

Turnaround Companies Of 2020

The year 2020 was anything but dull for equity investors. Many made money in 2020 and on an average the risk-taking appetite was on the rise in 2020. The stock prices were no doubt volatile and several stocks more than doubled in 2020. The year clearly belonged to the defensives and penny stocks and to a great extent 2020 was also a year for turnaround stocks. Shreya Chaware highlights the turnaround stories that helped create wealth for investors in 2020 while also sharing key elements to watch out for in identifying turnaround stocks

6 mins read
Dalal Street Investment Journal
January 04, 2021

Welcome 2021 With A Revisited Portfolio

Hemant Rustagi Chief Executive Officer, Wiseinvest Pvt Ltd.

3 mins read
Dalal Street Investment Journal
January 04, 2021

Replace Fixed Deposits With Mutual Fund Schemes

The worst hit by the lower interest rates are investors who had relied on bank fixed deposits to earn interest. The option for such investors is to shift to debt mutual funds. The article explains why

4 mins read
Dalal Street Investment Journal
January 04, 2021

Markets End 2020 On A Cheery Note

With positive news announcements about the vaccines and successful clinical trials, the healthcare industry remained in the limelight, gaining 2.10 per cent during the fortnight

4 mins read
Dalal Street Investment Journal
January 04, 2021

ALKEM LABORATORIES ON A ‘PRESCRIBED' JOURNEY OF SUCCESS

Alkem Laboratories Limited is a pharmaceutical company engaged in the development, manufacture, and sale of pharmaceutical and nutraceutical products.

2 mins read
Dalal Street Investment Journal
January 04, 2021

Jayesh Dadia Chartered Accountant

Tax Column

4 mins read
Dalal Street Investment Journal
January 04, 2021

2021 Value Stocks

Market participants are focusing on 2021 and there is a huge level of enthusiasm and high expectation on the part of investors as far as the forthcoming year goes after an unbelievable 2020. It was not easy to pick pharmaceutical and IT as probable winners at the start of 2020 and similarly it will not be easy to pick the set of stocks that may dominate in 2021. Geyatee Deshpande puts forth a case for value stocks to do well in 2021 while Yogesh Supekar highlights how to identify value stocks

10+ mins read
Dalal Street Investment Journal
January 04, 2021
RELATED STORIES

AMERICANS CAN PAY THEIR CREDIT CARD BILLS, BUT FOR HOW LONG?

The coronavirus pandemic hasn’t stopped Americans from keeping up with their credit card payments, thanks in large part to government relief programs passed by Congress earlier this year.

3 mins read
AppleMagazine
AppleMagazine #476

Getting More from Less

Everyone has been forced to cut back in some way—but limitations can lead us to even greater growth. We asked six entrepreneurs: What unexpected benefits have you gotten from change?

2 mins read
Entrepreneur
December 2020

Are We Going Digital Forever?

The pandemic swiftly moved our world online. Once you discover the power of engaging your customers digitally, you won’t want to go back.

3 mins read
Entrepreneur
December 2020

Japan's Softbank Back in The Black As Investments Improve

Japanese technology company SoftBank Group Corp. said it bounced back to profitability in the last quarter as its investments improved in value.

2 mins read
AppleMagazine
November 13, 2020

Focus On Your Mission

Our worlds may feel shaken. But we’re actually much sturdier than we think.

3 mins read
Entrepreneur
Startups Fall - Winter 2020

My Mentor Taught Me Always Go Deeper

A branding expert weighs in on a promising business idea.

2 mins read
Inc.
October - November 2020

Give Your Portfolio Some Shine

With a weaker dollar and inflation stirring, it’s probably a good idea to diversify with a little gold.

5 mins read
Kiplinger's Personal Finance
November 2020

Death and Taxes

The Trump tax cut failed to deliver for all but the very rich. And the gop thinks this is the perfect time for more.

10+ mins read
Mother Jones
July/August 2020

An Alternative Way To Get Burned

YieldStreet pitches investments you can’t get elsewhere. That’s not always a good thing

6 mins read
Bloomberg Businessweek
May 11, 2020

Lower Your Health Care Costs

Health savings accounts help defray the cost of high-deductible health plans. They’re also a powerful way to invest for retirement.

9 mins read
Kiplinger's Personal Finance
April 2020