Recently RankMF launched a better and smarter tool of investment, named SmartSIP. Unlike a normal SIP, SmartSIP is a proprietary tool developed by RankMF, which invests in mutual funds based on the market and economic situation. Now as the SmartSIP is unique in itself many investors might not be aware of this tool and may be interested in knowing the difference between SmartSIP and SIP. Subsequent sections will highlight the core differences between SmartSIP vs SIP. 

Comparison between a SmartSIP and a normal SIP:

Basis

SmartSIP SIP
Definition  A SmartSIP order is a simple order type with 2 mutual fund schemes – one leg is the equity scheme and the other leg is a liquid scheme. It works as a multi – leg composite order where based on the Margin of Safety Index (MosDex TM ) of the Equity scheme, automatic adjustments are made between the equity schemes and the liquid scheme. SIP is a tool through which investors can invest in mutual funds in regular intervals depending upon the frequency decided by the investors. 
Frequency of Investment Under normal conditions, investment is done in regular intervals. During the bear market phase, Some of the investment may be skipped by SmartSIP SIP ignores the market conditions and a specified amount of money is invested on behalf of investor during a particular date of the month
Mandate Approval SmartSIP needs additional mandate in the name of executing firm as this is a specialized product with certain goals and rules SIP is a tool given by exchanges so the mandate is created in the name of exchanges and not the executing firm 
Returns Usually SmartSIP generates additional returns in the line of 4%-7% over and above the conventional SIP SIP is an averaging out process so the bull and bear market impact  the investment to a limited level. One can generate exceptional gains with time  
Risk Level Lower Risk due to the fact that when markets are expensive, instead of buying the expensive equity units, liquid units are bought which leads to lower risk Compared to equity investment SIP is less risky but riskier than the SmartSIP option

Outperformance of the SmartSIP v/s SIP on the HDFC Top 100 Scheme

Returns of the SmartSIP v/s the Conventional SIP

Observe that the the SmartSIP system beats both the regular SIP and the conventional SIP almost each and every time. The average outperformance since 1st January 2005 is 5.76% on the regular SIP and 7.17% on the conventional 70:30 SIP.

SIP Returns vs SmartSIP returns on HDFC Top 100 fund

SIP Returns vs SmartSIP returns on HDFC Top 100 fund

Corpus value of the SmartSIP v/s the Conventional SIP Observe that the invested corpus under the SmartSIP system is significantly higher than the corpus value of a regular SIP.

 

Realisable Corpus value in SIP vs SmartSIP
                                                                     Realisable Corpus value in SIP vs SmartSIP

 

Disclaimer: Investments in Mutual Funds are subject to market risks. Please read all scheme related documents carefully before investing. Past performance is not an indicator of future returns.

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