SIPs or systematic investment plans that is a mode to invest in mutual fund schemes in a regular and disciplined way is now being researched on different houses to render them for lucrative for investors. And primarily this is the case with SIPs in equity mutual funds.
Here are illustrated few SIP variants that can fetch you comparably a higher return:
Value SIP: In this scheme basis the market dynamics and return in a month's time the amount in respect of the SIP is deducted from the investor's account. This works as though, suppose an investor has a SIP of Rs. 5000 then if it returns Rs 500 or becomes in value Rs. 5,500, then against the next month installment towards the SIP account, only Rs. 4500 will be deducted. And there is depreciation in the value say Rs. 5000 now reduce to Rs. 4900, then in the next month Rs. 5100 will be deducted.
As per the calculation, if the scheme works like this then an over a period of say 10 years, it will earn an investor a higher return by 1.5%.
Modified SIP: Some of the mutual fund houses have also come up with such schemes that signal what should be an investor's approach towards his investment in the SIP i.e. whether or not he should be continuing in the same scheme, skip the investment for a month or double his investment in a particular month.
And as per the study by the brokerage firm going by this method of investment in SIP on the Sensex, an investor will be able to reap an annualized return higher by some 5.9% in comparison to the return he would have got via investment using traditional methodology.
Notably, this is against the usual practise where a designated pre-decided amount is deducted on a month on month basis for the entire tenure in a SIP scheme on a fixed date. And the investment is deployed regardless of the valuations as well as the market level.
Differential SIP types: Suitable for whom?
As per investment experts, investors who have the acumen as well as are evolved to understand market dynamics and can keep pace with it can go for differentiated SIPs to earn a comparably higher return.