I am holding 7 mutual fund schemes in which I invest ₹8,000 a month through SIPs since January 2008. However, I do not see these investments to be profitable and hence do not think that my goals may be fulfilled by these funds. At the same time, I am unable to make up my mind on what to do with these investments. Kindly advise if I should switch funds or redeem my investments?
- Sanjay Pandita
Your disappointment with your investments is understandable considering there is little to cheer about them in the past five years. To bust the myth that your SIP investments over time have not fared well, we populated them based on the exact dates on which you made these investments on our Portfolio Manager. The result: over a six year span, you have gradually invested ₹4.15 lakh which is now worth ₹5.45 lakh. The portfolio is made of good funds, is well diversified across 170 stocks, with the top sectors accounting for 64 per cent allocation and 97 per cent of your investments are in equity. The gain you have made over these six years is ₹1.3 lakh with the portfolio earning a near 11.81 per cent tax fee annualised returns, if you were to redeem investments older than a year.
The returns you expected from your investments may have been more, but given the way the markets have fared, your investments have not done as bad as you think. In this time period you have gained on a lot of counts: you have accumulated money over time and experienced the averaging benefits of SIP. Although some of your investments did experience a full investment cycle and are likely to gain as the markets start to move up, there are some that are yet to go through a full cycle. The minimum return at the moment in your portfolio is 9.75 per cent and the highest is 15.12 per cent; this variance is the beauty of investing in equity.
To illustrate how your investment has done better, we assumed how a recurring deposit would have fared paying 8.25 per cent interest over six years, instead of the ₹5.45 lakh, your ₹4.15 lakh savings would have grown to ₹5.05 lakh. We are not debating the inconvenience of investing fixed sums at regular intervals. For those who are content with the fixed 8.25 per cent return, the inflation in these past six years has mostly been in double digits. Further, a fixed return instrument earning 8.25 per cent is pre-tax, which means depending on the tax bracket that you fall in; your actual gains would be much lower. While it is one thing to crib about your investments not faring well, the reality is that your investments have gained and done well even in the given circumstances. Having persevered this long, you should continue with your investments and be patient to make the most from the gains when the markets rise.
| Fund Scheme | Purchase Date | Current Market Value (₹) | Unrealised gains (₹) | Annualised returns (%) |
| Birla SL Frontline Equity-G | 20/04/2010 | 60972 | 12972 | 12.39 |
| Birla SL Tax Relief 96-G | 21/04/2009 | 76153 | 16153 | 9.74 |
| DSPBR Equity-G | 21/07/2008 | 91823 | 22824 | 10.08 |
| DSPBR Top 100 Equity Reg-G | Jun 31, 2011 | 38965 | 4965 | 9.95 |
| HDFC Top 200-D | 07/01/2008 | 1,09,218 | 34218 | 12.01 |
| HDFC Top 200-G | 14/06/2011 | 40316 | 6316 | 12.55 |
| IDFC Premier Equity Reg-G | 20/04/2010 | 1,28,369 | 32369 | 15.12 |
| Total Portfolio | 5,45,815 | 1,29,816 | 11.81 | |
| Portfolio as on March 26, 2014 | ||||
This article was originally published on June 06, 2014.
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