Investing in a Systematic Investment Plan or Mutual Fund and switching to the best-performing index yearly can harm 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 on this, and these things have come to light.
Comparison Of 19 Year SIP Returns
WhiteOak Capital Mutual Fund has compared the returns of such SIPs over 19 years 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 cases, the investors How much return has he received?
This study has found that in the previous 19 years until April 1, 2024, SIPs in the Smallcap and Midcap Index have given better returns than those in the Large Cap Index. However, in the 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 index 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 an annual return of 18.8 per cent till April 1, 2024. However, after changing the index, only a 15.5 per cent return was given. If an investor starts SIP in the Smallcap Index, he gets an annual return of 16 per cent. On the other hand, when the index was changed, the return was only 15.1 per cent.
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. Those who started in the midcap index and switched to the best-performing index last year got a return of only 1 percent. The average return of SIPs in the smallcap index has been 14 percent, and switching to the best-performing index has given a return of 13.9 percent.
