Mutual fund SIPs did better than lumpsum across 5 equity categories in 2 years. Check details
Over two years, SIPs outperformed lump-sum investments across equity fund categories, with the gap widest in smallcap funds. SIPs delivered positive average returns even where point-to-point returns remained muted or negative.
In a two-year period, mutual fund Systematic Investment Plans (SIPs) outperformed lumpsum investments across various equity categories, according to a report by ETWealth. Across all categories, SIP returns consistently surpassed point-to-point returns. For largecap funds, SIPs delivered an average return of 0.3% over two years, while lumpsum investments yielded a negative 3.7%.
Flexicap funds showed positive SIP returns of 5.8%, compared to a negative 0.7% for lumpsum investments. SIP returns were notably higher than lumpsum returns in flexicap funds over the two-year period. In the smallcap category, SIPs generated the highest average return at 15.9%, compared to a 3.1% return for lumpsum investments.
SIPs benefit from lower unit costs during market downturns and the systematic transfer plan (STP) helps avoid the risk of a single bad investment entry. However, lump-sum investments may be advantageous for investors who possess strong conviction in valuations and are prepared to endure short-term volatility for potential gains.
Written by urgent.news from The Economic Times - Top News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
