HDFC Equity fund is a middling performer last few quarters , with performance just about equal to its benchmarks and category averages (Note: 3/5 Stars by Crisil MF Research and PL doesn’t currently have it in its recommended funds list ) . However, its popularity and invested corpus remains high and for this reason, we chose it (and not the best performer) to see how an SIP in it would have performed during a very volatile 3 years. The question in our mind – Is an average performer good enough to be invested into when it comes to SIPs when we don’t recommend it for lumpsum investing?
The numbers stack up as follows:
- In January 2015, the market (Nifty) was at a high of 9000 then fell to 7000 fairly sharply by March 2016 before ending March 2018 around 10000 levels.
- This means, if an investor invested in January 2015 into the market, the index’s returns would have been just about 11%.
- Versus that, HDFC Equity Fund’s NAV, in the same period, grew from Rs 469 to Rs 591- an absolute return of 26%! So even an average performer beat the index by 15% during the period.
- If you had chosen however not to invest in bulk, but invest in an SIP at the peak of 9000 in January 2015, just to see a massive correction before coming back to higher levels by March 2018, your 39 instalments of lets say Rs 1000 (Total Investment = Rs 39000) would have been valued at Rs 48,500! A return of 24% – and remember, your entire money was not invested during the duration so your average investment would just have been about Rs 19,500 during the period – with the rest of the money earning interest in a liquid fund or deposit! If you agree with this logic then the return is closer to 155%!
How many of us beat this return with our expertise? Think about it and start your SIP Today! Mail us at firstname.lastname@example.org for information or queries on mutual funds and SIPs.