Slow and steady wins the race

Systematic Investment Plan (SIP) investors have once again a reason to smile. The slow and steady investing in mutual funds has proved that every small amount invested at regular intervals has given good returns. SIP mode of investing offers twin benefits to the investors:

1. Rupee Cost Averaging: - In the turbulence of the stock market, SIPs have worked exceptionally well. At every lower level, investors have been able to buy more units in a fund with the same amount invested. It thereby helps the investors to arrive at a better average purchase cost

2. Compounding: - Even when the markets are on an upswing, as was witnessed since March ' 09, SIPs have compounded your earnings

Large Cap Funds	1-Yr SIP Returns (%)	2-Yr SIP Returns (%)	3-Yr SIP Returns (%)
DSP BR Top 100	44.60	30.48	36.54
HSBC Equity	34.15	16.96	20.72
Franklin India Bluechip	46.02	29.46	30.31
HDFC Equity	65.50	45.27	45.23
HDFC Top 200	57.97	41.93	46.57
Average	49.65	32.82	35.87

(NAV data as on Oct 21, 2009) (The returns are absolute)
(Source : Crisil Fund Analyser)

 

The above table explains the absolute returns generated by SIPs in the respective time frame. For investment in some large cap funds, SIPs on an average have delivered absolute returns of 49.65%, 32.82% and 35.87% over 1-yr, 2-yr and 3-yr periods.

In our opinion, investors should subscribe to the habit of investing regularly through SIPs, and by doing so, stay away from the futile exercise of timing the entry points.