I’ve been hearing a lot these days about smart SIP option being promoted by some fund houses or distributors. It’d be great if the same or a similar service is catered by Zerodha Coin as well.
SIP is a wonderful strategy. You keep investing regardless of the market conditions and assuming that you have planned your investments and gotten your asset allocation right, you end up with a good corpus upon retirement.
The so-called “Smart SIPs” seek to tinker with the traditional SIP. Meaning, they try to time the markets. Ask anybody who has tried and you’ll see that they would have fared poorly.
What they do is to try to time the markets based on a metric like an index PE. If the index PE is below X, they increase your allocation to equity and if the index PE is over a certain level they decrease or worse yet completely move to a liquid fund or an arbitrage fund - return profile of both the funds are the same.
Now, I am pretty sure they would have shown impressive backtesting results, but there is inherent selection bias there. Backtested results and real life are 2 different things :). The problem with smart SIPs can be summed up in this quote:
The market can remain irrational longer than you can remain solvent. - John Maynard Keynes
Now, assume that the market goes on a rip-roaring rally, you wouldn’t have participated in it because your equity allocation would have been less or 0.
So unless you are sure what you are getting into, keep it simple and stick to the traditional SIP.
Now, answering your question - No, we don’t provide any smart SIPs. However, there certain Dynamic Funds, which try to do this. Franklin Dynamic PE fund is one such example (Not a recommendation).
This fund tries to time markets based on Nifty PE. It invests more in Equity when the markets are undervalued and less when they are overvalued. It uses an equity and debt fund within the wrapper of a single fund.
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Who told you that SIP is a wonderful strategy…just bcos everyone is advising…if you are an active investor you should do buy index fund/ETF on dips, keep it for backtested target returns in staggered manner…you will generate decent returns. If you understand charts buy in oversold zone. SIP in even top rated MF has not given any yield in past 3-4 yrs inspite of markets reaching new historic highs…Get smart & DIY !!!
Good for you!
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