Use SIP variants to earn more

MUMBAI: Systematic Investment Plans—a system to put money into mutual fund schemes regularly—is seeing variants these days. Distributors have devised ways to improve returns from equity mutual fund investments done through SIPs.

For instance, Rank MF, owned by Mumbai-based Samco Securities, said its modified SIP system can make 5.9% extra return compared to the traditional way every year. The system signals whether an investor should continue with the SIP in the same scheme, jump a SIP or double his SIP in a month.

“Our study shows that for five year periods over the last 30 years, an SIP done on the Sensex using this method, would have earned the investor an annualised 5.9% more compared to the traditional method, “says Omkeshwar Singh, Head (Mutual Fund) Distribution, Samco Securities.


Traditional SIPs involve investing a fixed amount of money in a mutual fund scheme—mostly equity-- at the same date every month. This is done irrespective of the level of the markets and the valuations at which the market is trading.

Some other investment portals and fund houses also offer differentiated SIPs. For instance, online portal fundsindia.com offers a 'value SIP'. In this system, if you invest Rs 5,000 every month, and the value of that investment appreciates to Rs 5,500 the next month, the system would deduct only Rs 4,500 from your account. If it depreciates to Rs 4,900, you invest Rs 5,100. On an average, using this method of investing, investors could have earned 1.5% more than their regular SIP, over the last five years.

Investment advisors said the differentiated SIPs may not be ideal for new investors.

“Such products are suitable for evolved investors. Small investors may not have the discipline to keep cash and follow a strategy where you can skip an instalment or do double in a particular month,” says Amol Joshi, founder, Plan Rupee.