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RETAIL RESEARCH

MUTUAL FUNDS

06 APRIL 2016

SIP Returns on MF Ready Reckoner Schemes

SIP Returns (XIRR) (%) on MF Ready Reckoner Schemes:
Equity and Hybrid Funds:
Scheme Name
Birla Sun Life Frontline Equity Fund (G) INF209K01BR9
Franklin India Prima Plus - (G) INF090I01239
SBI BlueChip Fund (G) INF200K01180
Benchmark:
NIFTY 50
S&P BSE 100
Franklin India High Growth Companies (G) INF090I01981
Mirae Asset India Opportunities Fund (G) INF769K01010
ICICI Pru Value Discovery Fund (G) INF109K01AF8
Benchmark:
NIFTY 50
NIFTY 500
Franklin India Smaller Companies Fund (G) INF090I01569
Mirae Asset Emerging Bluechip Fund (G) INF769K01101
DSP BR Micro-Cap Fund (G) INF740K01797
Reliance Small Cap Fund (G) INF204K01HY3
Benchmark:
NIFTY 50
Nifty Free Float Midcap 100
S&P BSE Small-Cap

SIP Returns (XIRR) (%)

3 Year
Equity - Diversified - Large CAP
12.02
17.81
16.20

5 Year

7 Year

14.87
17.99
17.67

13.40
15.98
14.86

4.59
5.05
Equity - Diversified - Multi CAP
19.66
14.71
21.09

7.98
8.29

7.51
7.60

21.41
16.62
21.99

18.30
15.51
19.94

7.98
9.87

7.51
8.60

28.33
26.78
29.98
27.91

23.80

7.98
14.97
13.03

7.51
12.33
9.02

16.33
15.25
24.15
31.41
25.86
17.85
26.40

15.12
14.52

7.98
14.10
12.53
10.47
19.78

7.51
13.30
10.81
10.28
20.28

21.68
19.02

15.32

7.98
9.87

7.51
8.60

16.22
16.79
17.18

15.61
15.45

8.79
7.98

8.29
7.51

4.59
7.57
Equity - Diversified - Mid n Small CAP
28.09
27.62
35.88
30.55

4.59
16.53
16.20
Equity - Sector/Thematic Funds
Tata Ethical Fund - (G) INF277K01956 (Shariah)
13.96
ICICI Pru Banking & Fin Serv (G) (Banking) INF109K01BU5
11.74
Franklin Build India Fund (G) (Infrastructure) INF090I01AE7
24.18
UTI-Transportation & Logistics (G) (Auto) INF789F01299
31.79
Birla Sun Life MNC Fund - (G) (MNC) INF209K01322
27.19
Birla Sun Life India GenNext Fund (G) (Consumption) INF209K01447
15.53
SBI Pharma Fund (G) (Pharma) INF200K01446
21.97
Benchmark:
NIFTY 50
4.59
NIFTY MNC
11.81
Nifty 500 Shariah index
10.31
S&P BSE BANKEX
8.33
S&P BSE Health Care
13.22
Equity - Tax Planning (ELSS)
AXIS Long Term Equity Fund (G) INF846K01131
19.25
Birla Sun Life Tax Relief '96 (G) INF209K01108
18.77
Benchmark:
NIFTY 50
4.59
NIFTY 500
7.57
Hybrid - Equity Oriented
HDFC Balanced Fund (G) INF179K01392
15.76
Tata Balanced Fund - Plan A (G) INF277K01303
15.40
L&T India Prudence Fund (G) INF917K01LB0
16.40
Benchmark:
Crisil Balanced Fund Index
6.91
NIFTY 50
4.59

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25.35

27.26
23.78
17.25
25.49

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Reliance Monthly Income Plan (G) INF204K01FD1
HDFC Monthly Income Plan - LTP (G) INF179K01AE4
Benchmark:
Crisil Balanced Fund Index
Crisil MIP Blended Index
NIFTY 50

Hybrid - Monthly Income Plan - Long Term

10.03
9.23
6.91
9.40
4.59

10.28
9.68

9.84
9.39

8.79
9.27
7.98

8.29
8.67
7.51

NAV value as on 01-Apr-2016.

Source: ACEMF

Debt Funds:
1 Year

SIP Returns (XIRR) (%)

2 Year

3 Year

8.14
8.22

8.36
8.44

8.61
8.68

7.89

8.18

8.52

8.65
8.87

8.83
9.00

9.06
9.16

7.89
Short Term Income Funds
9.33
8.33

8.18

8.52

9.58
8.55

10.10
8.78

8.53

8.89

9.19

9.81
6.73
8.65

10.00
8.04
8.99

11.47
9.14
9.30

9.13

9.82

10.06

7.32
7.13

9.99
9.16

10.90
9.75

9.80

10.75

11.07

Scheme Name
Liquid Funds
HDFC Liquid Fund(G)
JM High Liquidity Fund(G)
Benchmark:
Crisil Liquid Fund Index

Ultra Short Term Funds

ICICI Pru Flexible Income Plan(G)
Franklin India Ultra Short Bond-Ret(G)
Benchmark:
Crisil Liquid Fund Index
Birla SL Treasury Optimizer Plan(G)
Axis Short Term Fund(G)
Benchmark:
Crisil Short Term Bond Fund Index

Income Funds
ICICI Pru Long Term Plan(D)
UTI Dynamic Bond Fund-Reg(G)
HDFC Medium Term Opportunities Fund(G)
Benchmark:
Crisil Composite Bond Fund Index
Gilt Funds
SBI Magnum Gilt-LTP-Reg(G)
IDFC G Sec-PF-Reg(G)
Benchmark:
I-Sec Li-BEX
NAV value as on 01-Apr-2016.

Source: ACEMF

What is an SIP? Systematic investment plan (SIP) is a disciplined way of investing in mutual fund schemes where an investor can
make regular and equal payments at regular intervals for periods to accumulate wealth over long run. An SIP is a planned
approach towards investments and helps you inculcate the habit of saving and building wealth for the future.
What is the structure of an SIP? SIP can be termed as a regular investment scheme where a stipulated amount of money (can be
Rs. 50, Rs.100, Rs. 250, Rs. 500, etc) is invested daily, weekly, monthly, quarterly or yearly, instead of investing money in bulk. It is
similar to a regular savings scheme like a recurring deposit with a bank where one can put small amounts at periodic intervals.
Investing in a mutual fund through SIP allows participation in the equity markets systematically.
What is the rationale and importance of Systematic investing? Lump sum investing or investing in one go will be suitable only
when there is a high degree of certainty that the market is going to go through a rising trend. In common, equity markets are
volatile in nature and prediction is very difficult. If an investor invests a bulk amount on a day and the market declines, the
investor may panic and withdraw the amount leading to a sizeable loss. Also for most investors, one-time investment may not be
feasible due to a lack of resources.

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In the case of systematic investment, it is not necessary for the investor to accumulate a huge amount at one go before making
an investment. He can accumulate small amounts and invest regularly. An SIP also enables investors to start investing in equity
early.
The strategy behind starting a SIP with an equity scheme is to go on investing regardless of the market conditions. Investors have
to keep SIP running for a longer period and do not stop it in downturns. Else, he will lose out a chance to make money in the long
term if he stops SIP midway when the market tanks.
What are the salient features of SIP? It is needless to say that for long-term wealth creation through equity market you need
discipline and long term time horizon which are inherent features of SIP. The following features of SIP makes it fit for equity
market.

Simple and disciplined approach towards investment.

Investment possible with small sum of money invested regularly to accumulate wealth.
Based on concept of Rupee Cost Averaging.
Flexibility in terms of amount or quantity based SIP.
Flexible intervals like Daily/ Weekly/ Fortnightly/ Monthly/ Yearly basis.

What are the benefits of SIP? As common investor doesnt have enough time and resources, SIP proves to be a viable option for
them. Listed below are the important benefits of this instrument.

Reduces Risk because of Rupee Cost Averaging.

SIP can be started with very small amount of money.
Timing the market is not necessary.
Long term financial goal can be aligned with SIP.
Disciplined approach towards Investment helps in controlling the emotions.

How does SIP help to reach Your Financial Goal? SIP is a perfect tool for people who have a specific, future financial
requirement. By investing an amount of your choice every month, you can plan for and meet financial goals, like funds for a
childs education, a marriage in the family or a comfortable post retirement life.
What is Rupee Cost Averaging? Rupee cost averaging is an approach or a benefit wherein the investor gets while investing in
equity market with a fixed amount of money at regular intervals like SIP route. This ensures that the investor can buy more units
when prices are low and less when prices are high. Ideally speaking, most investors want to buy stocks when the prices are low
and sell them when prices are high. But timing the market is time consuming and risky.
Rupee-cost averaging is popular among people who invest in volatile funds. If a fund's share price fluctuates a lot, rupee-cost
averaging can help reduce the average cost per share over time when you are investing, and increase your profit when you are
systematically withdrawing your money.
A more successful investment strategy is to adopt the method called Rupee Cost Averaging. However, Rupee-cost averaging
doesn't guarantee a profit or eliminate risk, and it won't protect you from a loss if you sell shares at a market low. Before
adopting this strategy, you should consider your ability to continue investing through periods of low price levels.
SIP helps in riding market volatility: In other way, we can say that the SIP helps the investor make profit from stock market
volatility by automatically buying more units when prices are falling and fewer units when prices are rising, thus lowering the
average purchase price.
What are the benefits of starting early? The early birds always have an advantage over those who are off the blocks late. They
manage to save a decent pile for their requirements with much less fuss. Usually, people at young age undermine the importance
of saving small sums of money and keep procrastinating, pushing the start to a later date. Besides, they often perceive investing
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as a cumbersome process. This is where SIP comes in handy, a good way to save through MFs is to set aside a certain amount of
ones income for them. This, besides helping one make forced savings, also gives one a financial headstart.
What is power of compounding?
Compounding is the fact that the money you make off an investment can be reinvested to make even more money than your
initial investment. The money you make goes back to work to make you even more money than before.
Say you've invested Rs.10, 000 and it makes 10% interest per year. In the first year, you make Rs.1, 000 in interest. But in the
second year, you'll make Rs.1, 100 (not only does your initial investment of Rs.10,000 accrue interest but so does the additional
Rs.1,000 you made in the first year). In the tenth year, you'll make Rs. 2,358. And in the 30th year you'll make Rs.15, 864. That's
all without making another investment beyond your initial Rs.10, 000. In 30 years, the power of compounding gets you from
making Rs.1, 000 per year to making Rs.15, 864 per year.
Investing via SIP over long term is advisable Why?
i. To achieve long term goals: Long-term wealth creation through equity market requires disciplined approach and long term time
horizon which are inherent features of SIP. Ideally speaking, SIP is a perfect tool for people who have a specific, future financial
requirement. By investing an amount of your choice every month, you can plan for and meet the long term financial goals, like
funds for a childs education, a marriage in the family or a comfortable post-retirement life. Secondly, staying invested over
longer term in the equities helps to handle the fluctuation or volatility in the value of the stocks.
ii. Little Drops of Water Make the Mighty Ocean: Even investing a smaller amount in the equity market regularly over long period
can end up with a large corpus in the investors hand.
iii. Investing through SIP for longer time frame achieved better results compared to short term periods: Historical data suggests
that investing through SIP for longer time frame achieved better results compared to short term periods.
iv. The longer the time-frame, the larger are the benefits of averaging: Equity markets are volatile and move in a cycle. They go
up, peak, go down and then bottom. When one cycle is finished, the next begins. SIPs make the market volatility and cycles work
in favour of an investor and help in averaging out the cost. The concept is commonly referred to as rupee cost averaging. More
units are purchased when a schemes NAV is low (during market low) and fewer units when the NAV is high (during market up).
Hence, when the two cases are taken together, the cost is averaged out. The longer the time frame, the larger are the benefits of
averaging.
Why one should not stop SIP?
Many investors make the mistake of discontinuing their SIP investments when market falls. This exit could impact the portfolio
returns significantly as it fails to get the opportunity to average costs. As discussed above, more units can be purchased when a
schemes NAV is low (during market low) and fewer units can be bought when the NAV is high (during market up), hence the
investor can achieve averaging the cost out.
Investments through an SIP can ensure steady returns. Ideally speaking, it is difficult to time the market. Whereas, with an SIP,
investors can ride safely during market downturns and manage better returns if they stay invested through an entire market
cycle.
SIP investors need not to worry about the fluctuations or ups and down that are seen in the equity market. You could grab better
returns in the next 6 to 12 months period if you stay invested during market falls.

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SIP in ELSS:
The SIP option helps start tax planning from the beginning of the financial year. But investors have to keep in mind that every SIP
installment is meant to be locked in for 3 years. Investments through Systematic Investment Plan mode have grown firmly and
given significantly higher returns over the longer term. Investors can prefer monthly or quarterly frequency to invest in ELSS
schemes given the current market condition. SIP works well across market cycles and helps to average out the cost of investment
that are done in different periods.
Taxation in SIP:
The tax implication applicable to the SIP investment is as same as that of the lumpsum investment in MF. The main point is that
the taxation of SIPs depends on the dates of investments. In equity oriented mutual fund schemes, under Growth option, the long
term capital gain tax is exempt if the units are sold after a year of the date of purchase (as per the current law structure). In this
case, to benefit out the long term capital gain tax, every instalment should be held at least one year.
Likewise, in non-equity oriented schemes, to attain the Long Term Capital Gain Tax benefit (that is 20% with indexation), the units
should be sold after 3 years from the date of allotment.
In ELSS, all the SIP instalments are locked in for three years.
There is an ideology behind selling the MF units that had invested through SIP as using the first-in-first-out (FIFO) method. That
means sell the earliest units first.
Conclusion:
Investing in Equity Oriented mutual fund schemes through SIP - longer the period the better the returns.
Investing in Debt Oriented mutual fund schemes through SIP - no major advantage of extending SIP beyond 3 years, however on
tax considerations, one may extend SIP beyond three years.
The following table shows as to how has a monthly SIP of Rs.10,000 grown if invested in the ready reckoner schemes over the
past 3/5/7 years.
Growth (in value terms) of the investment that invested in Reckoner Schemes through SIP mode:
Equity and Hybrid Funds:
No of instalments
Invested amount per month (Rs)
Total Amount Invested thru SIP (Rs in Lakh)
Scheme Name
Birla SL Frontline Equity Fund(G)
Franklin India Prima Plus Fund(G)
SBI BlueChip Fund-Reg(G)
DSPBR Micro-Cap Fund-Reg(G)
Franklin India Smaller Cos Fund(G)
Mirae Asset Emerging BlueChip-Reg(G)
Reliance Small Cap Fund(G)
Franklin India High Growth Cos Fund(G)
ICICI Pru Value Discovery Fund(G)
Mirae Asset India Opportunities Fund-Reg(G)
UTI Transportation & Logistics Fund(G)
ICICI Pru Banking & Fin Serv Fund(G)
Birla SL India GenNext Fund(G)
Franklin Build India Fund(G)

RETAIL RESEARCH

36
10,000
3.60
Category
Equity - Diversified - Large CAP
Equity - Diversified - Large CAP
Equity - Diversified - Large CAP
Equity - Diversified - Mid n Small CAP
Equity - Diversified - Mid n Small CAP
Equity - Diversified - Mid n Small CAP
Equity - Diversified - Mid n Small CAP
Equity - Diversified - Multi CAP
Equity - Diversified - Multi CAP
Equity - Diversified - Multi CAP
Equity - Sector/Thematic Funds - Auto
Equity - Sector/Thematic Funds - Banking
Equity - Sector/Thematic Funds - Consumption
Equity - Sector/Thematic Funds - Infrastructure

3-Year

60
10,000
6.00
5-Year

84
10,000
8.40
7-Year

Rs in Lakhs
4.28
4.64
4.54
5.87
5.31
5.29
5.49
4.76
4.85
4.45
5.57
4.27
4.50
5.05

8.63
9.31
9.23
12.34
11.87
11.46
11.76
10.10
10.24
9.01
12.73
8.72
9.28
10.76

13.45
14.73
14.16
20.47
19.36

15.98
16.93
14.49
21.85
14.00
15.41

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Birla SL MNC Fund(G)
SBI Pharma Fund-Reg(G)
Tata Ethical Fund(G)
Axis LT Equity Fund(G)
Birla SL Tax Relief '96(G)
HDFC Balanced Fund(G)
L&T India Prudence Fund(G)
Tata Balanced Fund(G)
HDFC MIP-LTP(G)
Reliance MIP(G)
Benchmark:
NIFTY 50
NIFTY 500
S&P BSE Small-Cap
Nifty Free Float Midcap 100

Equity - Sector/Thematic Funds - MNC

Equity - Sector/Thematic Funds - Pharma
Equity - Sector/Thematic Funds - Shariah
Equity - Tax Planning (ELSS)
Equity - Tax Planning (ELSS)
Hybrid - Equity Oriented
Hybrid - Equity Oriented
Hybrid - Equity Oriented
Hybrid - Monthly Income Plan - Long Term
Hybrid - Monthly Income Plan - Long Term

5.24
4.90
4.40
4.72
4.70
4.52
4.55
4.49
4.12
4.16

11.20
11.35
8.94
10.15
9.53
8.93
9.13
9.04
7.61
7.72

19.34
20.52
14.28

3.86
4.03
4.55
4.57

7.30
7.66
8.28
8.68

10.94
11.37
11.56
12.98

14.40
14.54
14.45
11.67
11.85

Debt Funds:
No of instalments
Invested amount per month (Rs)
Total Amount Invested thru SIP (Rs in Lakh)

12
10,000
1.2

2.4
1-Year

Scheme Name

24
10,000

36
10,000
3.6

2-Year

3-Year

Category
Rs in Lakhs

HDFC Liquid Fund(G)

JM High Liquidity Fund(G)
Franklin India Ultra Short Bond-Ret(G)
ICICI Pru Flexible Income Plan(G)
Axis Short Term Fund(G)
Birla SL Treasury Optimizer Plan-Ret(G)
HDFC Medium Term Opportunities Fund(G)
ICICI Pru Long Term Plan(G)
UTI Dynamic Bond Fund-Reg(G)
IDFC G Sec-PF-Reg(G)
SBI Magnum Gilt-LTP-Reg(G)

Liquid Funds
Liquid Funds
Ultra Short Term Funds
Ultra Short Term Funds
Short Term Income Funds
Short Term Income Funds
Income Funds
Income Funds
Income Funds
Gilt Funds - LT
Gilt Funds - LT

1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.25
1.24
1.24
1.24

2.60
2.60
2.61
2.61
2.60
2.63
2.61
2.64
2.59
2.62
2.64

4.07
4.08
4.11
4.10
4.08
4.16
4.11
4.24
4.11
4.14
4.21

Dhuraivel Gunasekaran (Dhuraivel.Gunasekaran@hdfcsec.com)

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office.
HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022)
2496 5066 Website: www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com. HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475."
Disclaimer: Mutual Funds investments are subject to risk. Past performance is no guarantee for future performance. This document has been prepared by HDFC Securities Limited and is meant for sole use by the
recipient and not for circulation. This document is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to buy any security. The information
contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it should not be relied upon as such. We may have from time to time positions or options on, and buy and sell
securities referred to herein. We may from time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended for non-Institutional Clients.
This report has been prepared by the Retail Research team of HDFC Securities Ltd. The views, opinions, estimates, ratings, target price, entry prices and/or other parameters mentioned in this document may or may
not match or may be contrary with those of the other Research teams (Institutional, PCG) of HDFC Securities Ltd.

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