An SIP is a mode of investment enabling an investor to average out the cost of his investments across his investment horizon.
I want to redeem some units from my equity MF SIP. How long will it take to credit the money into my account and would there be any exit load?
In case of redemption from equity funds, the proceeds are credited to your account on a T+3 days basis for equity funds (T being the transaction date). Most equity funds have an exit load of 1% up to one year from the date of investment. Units being redeemed should not be under the exit load period. Investment under the lock-in period cannot be redeemed till the lock-in period is over.
Are there quarterly or half yearly SIPs to invest in mutual funds as I do not have regular income flow?
Yes, most mutual funds offer quarterly SIPs in their respective schemes. A few mutual funds offer half-yearly as well as annual SIP option to investors. Alternatively, you may invest through lumpsum mode at regular frequencies, which may be best suited given the uncertain nature of your income.
I have started an equity SIP in January 2018. The returns are just 5% despite the Sensex going up. Should I shift to another fund house?
An SIP is a mode of investment enabling an investor to average out the cost of his investments across his investment horizon. Since January 2018, the BSE Sensex Total Return Index has delivered 12% absolute return till date compared to the broader BSE 100 which has delivered 7.1%. This shows that the performance has been polarised with only few stocks contributing to the rally in the Sensex. Also, the broader market represented by the BSE 500 TRI, has delivered just 3.6% during the same period with the mid-cap (-8%) and small-cap (-16%) segments having corrected significantly during this period. Performance of active funds, which tend to be more diversified, may not resemble that of the Sensex and hence the divergence in performance relative to the Sensex.
Continue your SIP if you have a long investment horizon (more than 10 years) as you would benefit from buying units cheap in the current market scenario and benefit as the broader market recovers. Evaluate the performance of the fund vis-à-vis its category peers. If a fund has been delivering below average performance on a consistent basis (over to 2 to 3 years), you may switch to a more consistent one.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to email@example.com