To understand, how the new SIP in dollar term shall work, here is an illustration: In the case, like a fixed sum of money is put in a SIP scheme in rupee terms, similarly amount shall have to be contributed towards the scheme. Further, amount in dollar terms shall remain constant all through the term of the scheme but the exchange rate shall determine the amount that shall be debited from your rupee account. Considering if you decide contribute $10 to the scheme, though the amount of money in dollar terms shall remain same, the exchange rate or any likely appreciation or depreciation shall lower or increase your contribution respectively in rupee terms.
Investment in the scheme: Investors can invest in the scheme through an offline application and also only ECS transaction mode is available for effecting the transaction. Remember for the purpose of acounting the exchange rate, the scheme considers the RBI reference rate prevailing seven days before the transaction day. So, if the transaction is to be effected on 15th of a month, exchange reference rate on the 8th of the respective month shall be factored in.
Other aspects of the dollar SIP investment option: An investor has to invest a minimum of $100 and in multiples of $10 thereafter for a minimum of 1 year. The scheme comes with no upper ceiling on the investment limit.
In order to monitor high fluctuations in the exchange rate and correspondingly the amount that gets debited from one's bank account, investor also has the option to specify the maximum authorized debit or MAD. As with it only until the amount after the conversion of dollar into rupees falls within the stated limit, the auto-debit feature shall work.
Who can invest in such dollar SIPs?
So, in case as an investor, you wish to make some savings in dollar currency which is not easy to compute in rupee for some of your long-term goal, you can bet on the new scheme by Pinebridge mutual fund. Nonetheless, the scheme does not guarantee a higher return than other SIP schemes with investment made in rupee but offers return at par.