21 Jun 2023
Systematic investment plans in mutual funds have introduced a culture of financial discipline among investors. But what if we tell you that now, SIPs have also ushered in a culture of investing the smart way?
Investors should invest in a disciplined manner and stay invested as long as possible. Investors should also remember that there are various risks associated with investments, and it is, therefore, important to invest in a way, which can help minimise losses, if any, strategically.
That’s why regular SIPs are kind of effective for averaging risks from investments and costs of investments. One step ahead of SIPs now is Smart SIP.
What is Smart SIP?
In a Normal SIP, an investor invests a fixed amount in a mutual fund scheme periodically. In a Smart SIP, on the other hand, the SIP instalments to be invested periodically dynamically changes based on market valuations.
Smart SIP or Smart Systematic Investment Plans are a tool to invest in mutual fund schemes tactfully. They follow a method allowing you to buy mutual fund scheme units as per the prevailing market conditions.
How do they work?
Smart SIPs work on the basic principle of investing less when market valuations are up and investing more when valuations are down. Once an investor opts for Smart SIP, the investor decides the base amount of the Smart SIP instalment. In Smart SIPs, the instalment varies based on market valuations. To gauge valuation and the amount of instalment, it depends upon the net equity allocation (equity and equity-related securities net of hedged positions using derivatives) of Kotak Balanced Advantage Fund.
Investors also have an option to choose the Minimum and Maximum SIP Installment. In case the investor does not indicate the choice of option then the fund will consider it under the Default SIP option.
The above investment is for illustrative purpose only and should not be construed as a promise on minimum returns and safeguard of capital. KMAMC is not guaranteeing or promising or forecasting any returns. SIP does not guarantee of any profit/loss in declining/ upward markets. Actual returns may vary. KBAF is Kotak Balanced Advantage Fund
Features of Smart SIP:
Rupee-Cost Averaging: Like regular SIPs, Smart SIPs follow a disciplined approach of consistent investments regularly. This adds the advantage of the rupee cost averaging, in which one purchases more units when the market is low and fewer units when the market is high, thus averaging the cost of investments and help in mitigating risks.
Hassle-free process: An investor does not have to constantly worry about timing the markets with smart SIPs, as they aim to make investments basis the market movements without hassles.
Flexibility: Investors can decide the base Smart SIP instalment amount and the minimum and maximum amount for Smart SIP instalment. One can stop or opt for a changed duration of the Smart SIPs at any given time based on ones changing risk appetite or financial situation.
Conclusion:
Remember, markets always tend to move upwards and downwards, so as much as we like to, we cannot guarantee the outcome of our investments. However, systematic investments can be one of the effective ways which can help minimise the potential risks from markets and work towards long-term wealth generation.
The above risk-o—meter is based on the scheme portfolio as on 31st May, 2023. An addendum may be issued or updated on the website for new riskometer.
These materials are not intended for distribution to or use by any person in any jurisdiction where such distribution would be contrary to local law or regulation. The distribution of this document in certain jurisdictions may be restricted or totally prohibited and accordingly, persons who come into possession of this document are required to inform themselves about, and to observe, any such restrictions.
Smart SIP facility is a facility wherein investor(s) of Eligible scheme(s) can opt to invest a pre-determined sum at defined intervals. The investor(s) would be required to provide the Base Smart SIP amount. Basis this Base amount, the amount for Smart SIP instalment, which will be linked to the percentage of Net Equity Allocation (Equity and equity related securities net of hedged positions using derivatives) of Kotak Balanced Advantage Fund will be calculated. Please read the terms and conditions/General instructions in the applicable forms before investing. You may also visit https://www.kotakmf.com/Information/forms-and-downloads for further details including details on list of Eligible schemes. Kotak Mahindra Asset Management Company Limited (“KMAMC”) is not guaranteeing or promising or forecasting any returns. Smart SIP does not guarantee of any profit/loss in declining/ upward markets.
Investors may consult their financial advisors and/or tax advisors before making any investment decisions. Investors should read the Scheme information documents carefully before making any investment decision. The term Cheap, neutral and expensive are used to refer the different market scenarios. The past performance may or may not be sustained in future, and is no guarantee of any future results.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY
