Negative SIP returns in equity mutual funds? Here’s a strategy to avoid downside
Let's begin with some maths. IDFC AMC conducted a study comparing SIP returns in pure equity fund an a combo SIP in equity + debt. The results were quite interesting as given below: 3-year SIP in BSE 200 : A pure equity SIP Worst returns: -18% Best returns: 26% Average Returns: 10% 3-year SIP in Crisil Short Term Bond Index : A pure debt SIP Worst returns: 6% Best returns: 10% Average Returns: 8% 3-year Combo SIP : Equity+ Debt SIP in 60:40 allocation Worst returns: -8% Best returns: 19% Average Returns: 9% Note here that asset allocation of 60:40 in equity and debt has been taken as an example for a moderate investor. The returns from 40% allocation to debt have cushioned the total SIP returns and the fall is -8% as compared to -18% in a pure equity SIP investment. Source: IDFC Mutual Fund Average returns in the pure equity SIP is 10% and in the combo SIP, it stands at 9%.
Opinion | SIPs are the perfect way to invest in the present tough market condition
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