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 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. The below table will highlight the core differences between SmartSIP and SIP.
Comparison between a SmartSIP and a normal SIP:
|Definition||A SmartSIP order is an advanced 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) 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 at regular intervals depending upon the frequency decided by the investors|
|Frequency of Investment||Under normal conditions, investment is done at 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 the 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 a cost averaging tool. The bull and bear market impacts the investment to a limited level|
|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||SIP is less risky but riskier than the SmartSIP option|
The outperformance of the SmartSIP vs SIP on the HDFC Top 100 Scheme
Returns of the SmartSIP vs the Conventional SIP
Observe that 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
Corpus value of the SmartSIP vs the Conventional SIP Observe that the invested corpus under the SmartSIP system is significantly higher than the corpus value of a regular SIP.
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.