Investors investing in SIP have benefited well in the last one year.
Even though the stock market has seen a 6 percent decline in the last one year, investors who invest through SIP in mutual funds have been rich. According to the data, SIP investors have got up to 9 percent returns in the declining stock market in a year. Even investors who invest outright in mutual funds have also lost more than 6 percent. But the investors did not feel such disappointment during the SIP days. Let us tell you that on September 27, the stock market was on its peak. Since then, the Senseths and Nifty have seen a decline of more than 6 percent. Let us also tell you what kind of figures have been revealed about the stock market and mutual fund SIP.
Not a year less than a bad dream for the market
Foreign Institutional Investors (FII) has stopped purchasing in Indian shares citing high valuation, other better options, income growth and geo political. If we look at the data, foreign investors have withdrawn more than Rs 1.50 lakh crore from the stock market in the current year. In the last one year, this figure can reach about 2 lakh crore rupees. Due to which the Sensex and Nifty have fallen by about 6 percent in the last one year. Investors investing in largecap mutual funds have suffered a big loss due to this decline in Sensex and Nifty. On the other hand, there is also a section, even after the decline in the stock market, they have benefited and they are investors investing through SIP in mutual funds. The special thing is that on September 27, 2024, investors starting SIP on the peak of the market have also benefited by 9 percent by the current time.
Large loss due to largecap funds
According to the ET report, if you analyze all the 32 largecap funds available a year ago, then the whole story will be understood. With a weak performance of the Nifty 50, lump sum investors lost 6 per cent. Talking about the worst performing funds, JM Larzcap Fund has caused a loss of 10.6 percent of investors. Even the best performing Motilal’s largecap fund could only give a minor return of 2.2 percent. In fact, this is the only fund out of 32 that managed to give positive returns to investors who invest outright.
SIP did not disappoint
On the other hand, SIP has not disappointed investors at all. In the same funds, SIP investors have benefited more than 4 percent on an average. The best fund-Nippon India Large Cap Fund-Ne gave a return of about 9 percent through SIP, even if you have started your SIP with the peak of the stock market. The worst performing larger cap fund for lump sum investors-JM Large Cap Fund, which damaged the portfolio up to 10.6 per cent-still managed to get a minor but positive 0.5 per cent return for SIP investors. It tells how the cost average kept working in the favorite of SIP investors who decided not to invest the market at the right time by spreading investment and shopping at many levels. SIP has quietly converted a bad year for equity into money making opportunity.
What do you say?
Harsh Upadhyay, President of Kotak Mahindra Asset Management and Chief Investment Officer Harsh Upadhyay said in the ET report that SIPs help reduce the Through Risk of Cost Averaging. In unstable or limited markets, SIP investors benefit from shopping at different price points, making returns easily over time. He further stated that although lump sum investment is more sensitive to initial valuation, SIPs provide discipline and flexibility, especially in years when the stock market is going through a negative phase.