Be careful while investing in SIP, avoid changing the index every year.

SIP Update: If you invest in Systematic Investment Plan of Mutual Fund and keep switching to the best performing index every year, then it can prove to be harmful for you. It would be better to continue your SIP in the index in which you are invested. WhiteOak Capital Mutual Fund has conducted a study regarding this in which these things have come to light.

Comparison of 19 year SIP returns

WhiteOak Capital Mutual Fund has compared the returns of such SIPs over a 19-year period from FY 2005-06 to FY 2023-24. In this comparison, it has been seen that the returns generated from a SIP in an index in which the investment has been continued or in which the SIP has been switched to the best performing index of the last year, in both the cases the investors How much return has he received? This study has found that in the last 19 years till April 1, 2024, SIPs done in Smallcap Index and Midcap Index have given better returns than Large Cap Index. However, in the intervening last 19 financial years, SIPs in the largecap segment have outperformed the SIPs seven times, while SIPs in the smallcap and midcap index have outperformed the SIPs six times.

SIP gave higher returns in the same index

WhiteOak Capital Mutual Fund revealed that since FY 2005-06, holding investments in midcap and smallcap indices for the long term and switching to the best performing indices of the previous year have generated higher returns. According to the report, if an investor has continued investing in the midcap index instead of switching to the best performing index of last year, then he has got an annual return of 18.8 percent till April 1, 2024. Whereas after changing the index, only 15.5 percent return was given. If an investor starts SIP in Smallcap Index, he gets an annual return of 16 percent. Whereas on changing the index the return was only 15.1 percent.

If you look at the 10-year rolling SIP returns, a continuous SIP in the midcap index has given an annual return of 16.6 percent. Whereas those who started in the midcap index and switched to the best performing index of the last year got a return of only 14.5 percent. Whereas the average return of SIP in smallcap index has been 14 per cent and switching to the best-performing index has given a return of 13.9 per cent.

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