Mutual fund SIPs are one of the best ways to accumulate wealth over a period of time. We know that such investments should be made considering your financial goals, investment horizon and risk appetite. But what if he had a negative SIP return after his three years of investment by such a mutual fund? What about negative returns for SIP in 5 years, or even he in 10 years? But are there any such funds that exist in India that fit this scenario? Yes, we have such funds. In this article, we’ll take a look at the worst mutual funds that have consistently produced negative returns for his SIP over the past 3, 5, and 10 years.
Also Read: 5 mutual funds with the highest SIP returns in the last decade
What is SIP in mutual funds?
A SIP aka Systematic Investment Plan is a disciplined way to invest in mutual funds on a regular basis. There are daily SIP, weekly SIP, monthly SIP, quarterly SIP and annual SIP, but monthly SIP is the most popular.
Investing in the medium to long term, this disciplined approach can also reduce market volatility.
You can invest from Rs 500 per month through SIP.
Most mutual funds generate returns above the FD rate. Some even double or triple such returns when invested over the medium to long term. However, he does have one fund where his SIP returns have been consistently negative over the past 3, 5 and 10 years.
How did you single out this worst performing SIP mutual fund?
We considered all equity funds, including sector funds. (sauce: value research)
We looked to see if any mutual funds had generated negative SIP returns in the last three years. I was able to get 10 funds.
We looked to see if any mutual funds had generated negative SIP returns in the last five years. There are 3 funds.
We looked to see if there were any mutual funds that had generated negative SIP returns in the last ten years. Only one fund. Surprisingly, the fund has produced negative returns over the past three years, as well as SIP’s five years.
The name of the fund is “PGIM India Emerging Markets Equity Fund”.
About PGIM India Emerging Markets Equity Fund
The primary investment objective of the scheme is to generate long-term capital growth from investments in units of the PGIM Jennison Emerging Markets Equity Fund. The Fund invests primarily in equity and equity-related securities of companies located in or otherwise economically linked to emerging market countries.
Fund’s SIP return
3-Year Annualized Return – Negative 12.75%
5-Year Annualized Return – -6.06%
10-Year Annualized Return – Negative 0.81%
How did the 10,000 SIP amount increase/decrease?
3 years – investment is Rs 3.6 Lacs (10,000 x 36 months) and current value is 2.89 Lacs
5 Years – Investment is Rs 6 Lacs (10,000 x 60 months) with a current value of 5 Lacs
10 Years – The investment is Rs 12 Lacs (10,000 x 120 months) with current value of 11.28 Lacs
Annual return of the fund
1 year return – minus 24%
3-Year Annualized Return – Negative 7%
5-Year Annualized Return – -2.3%
10-Year Annualized Return – Plus 2.2%
How is the SIP return compared to peers in the same category?
I checked funds in the same category that floated over 5 years ago. These funds have generated SIP returns of 4% to 16% over the last 10 years and 4% to 21% over the last 5 years.
| scheme name | 3 years SIP | 5 year SIP | 10 years SIP |
|---|---|---|---|
| PGIM India Emerging Markets Equity Fund | -13% | -6% | -1% |
| ABSL Global Excellence Equity FoF | 6% | Five% | Four% |
| DSP Global Agriculture Fund | 0% | Four% | Five% |
| DSP World Gold Fund | -Four% | Four% | Five% |
| Kotak Global Emerging Markets | 2% | Five% | 6% |
| DSP Global Energy Fund | 15% | Ten% | 6% |
| Franklin Asian Equity Fund | 0% | Four% | 7% |
| Edelweiss ASEAN Equity Offshore Fund | 11% | 8% | 7% |
| ABSL Global Emerging Opportunity Fund | 7% | Ten% | 8% |
| Sundaram Global Brand Fund | Ten% | Ten% | 9% |
| PGIM India Global Equity Opportunity Fund | -2% | 9% | Ten% |
| Aditya Birla Sun Life Commodity Equity Fund | 19% | 14% | Ten% |
| ABSL International Equity Fund | 11% | 11% | Ten% |
| Edelweiss Greater China Equity Offshore Fund | -2% | 7% | 11% |
| Franklin India Feeder Franklin US Opportunity Fund | -2% | 7% | 12% |
| DSP Global Mining Fund | twenty three% | twenty one% | 14% |
| DSP US Flexible Equity Fund | 14% | 15% | 14% |
| ICICI Prudential US Blue Chip Equity Fund | 15% | 17% | 16% |
What about this AMC’s other funds?
Over the past five years, several of PGIM AMC’s mutual funds, including the PGIM Midcap Opps Fund, PGIM Flexicap Fund, PGIM Large Cap Fund and PGIM ELSS Fund, have outperformed their peers, generating returns ranging from 8% to 26% annually. . In fact, these funds have ranked among the top five in recent years.
Excluded from this analysis
All of this is fine, but how does this analysis help you as an investor?
Rajesh invests in a single mutual fund for his retirement goals. He credits his experts and friends who have advised him not to invest in too many funds, saying all will perform similarly over the medium to long term. But if such a fund produced negative returns, it would be a disaster for Rajesh. Can he avoid this?
#1 – Don’t Stick to a Single Fund financial goals. Invest in multiple funds. Even if one fund underperforms, the other funds will help you reach your goals to some extent.
Continuing the above example, if Rajesh invests in 2-3 funds and one fund is underperforming and two are outperforming, he may still be close to his goal. there is.
#2 – Don’t invest in a single category of mutual funds. Always diversify and invest in different categories of mutual funds. You can invest in large-cap funds, mid-cap/small-cap (High-risk, high-return fund), balanced funds, international funds (those looking for global exposure).
Continuing the example above, if Rajesh had invested in a large cap/index fund along with a global fund, he would have produced stable returns even if such a global fund underperformed.
#3 – Check your fund performance regularly. Two to three years of performance is sufficient to judge a fund’s performance, but long-term performance may be better.
Continuing the example above, if Mr. Rajesh felt that such a fund was underperforming its peers in the last three or five years, he would exit the SIP, put his emotions aside and invest in other mutual funds. would have invested in
This article is not meant to pinpoint any particular fund, but is intended to educate investors on how to do proper financial planning.
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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years.
