Dear Sreekanth, everywhere in sites all returns are mentioned for MF’s that are taken for suggestions for investing based on the performance & many people consider for SIP modes including me. But when I looked into SIP returns (sites doesn’t give this view?!) for most of MF’s that are having good returns displayed are actually returning very low SIP returns. E.g.
ABSL tax relief 96 fund is everywhere recommended under ELSS considering its performance for long term. It says 10.3% for 5yr (must be annualised, benchmark is 7.5%) but if I look at SIP performance its just 3.4 for 5yr (benchmark is 3.5%). Even AXIS long term equity fund that has excellent showcase of recommendations everywhere has very poor SIP returns even for 5yr!?
I found the similar low SIP retun values for many recommended funds.
with these kind of SIP returns for long Tenure, is SIP mode really recommended? I feel its not really worthy to take risk in MF’s for this kind low sip returns? Rather RD’s do?
I currently have 22000/month going into SIP’s for some MF’s, I’m just wondering should I stop SIP’s & go for lumpsums whenever feasible aligning to market conditions?
What is your opinion on my observation?
SIP is not a panacea.
SIP or lump sum or a combination of both can be continued for long-term.
Important points are – One needs to invest in different Asset Classes (allocation is important), review the performances of investments – take course correction if required, invest for long-term (especially in risk oriented products)…
If your investment objective is to protect your capital, you can invest in Bank FDs. But, wealth creation is your aim, it wont happen by investing in FDs as inflation will eat away the returns.
So, one needs to have good asset allocation and aim to achieve the required goal amounts.
The mentioned funds Birla Tax Relief or Axis LTE are decent ones.
Also, dont go by star ratings as they capture only recent performances. Go for consistency.
Kindly read :
- How to select the right and best Mutual Fund Scheme based on the Measures of Volatility?
- What are Mutual Fund Upside / Downside Capture Ratios? | How to use them in MF Performance Analysis?
- Mutual Fund Portfolio Overlap Comparison Tools
- List of all Popular Investment Options in India – Features & Snapshot