Magic of SIP

Long term SIP in HDFC Flexi Cap Fund – A Truly Rewarding Journey

HDFC Flexi Cap Fund has a track record of over 28 years. While the Fund has generated a CAGR of over 20% for a monthly SIP since its inception* (i.e. 1st Jan, 1995), it will be interesting to know an important fact about the Fund's journey.

An investor who started an SIP in the Fund and continuing till now would have seen his / her monthly instalment being processed at ~Rs.10 in the first month and Rs. 1159.28 in April 2023.

What would be the average cost of the units accumulated via SIP since inception?

Answer - Rs. 30.96

*Past performance may or may not be sustained in future. Complete performance details at the end of the article.

Why is the average cost surprisingly low and what has led to this kind of wealth creation?

Sustained, disciplined investment through SIPs would have led to more units being accumulated at lower NAVs during market downturns and gradually over time, market value of investment would have outpaced average cost of investment.

The gap between NAV and average cost per unit would have increased with every passing year to the extent that while NAV as of 31st March 2023 was Rs 1159.28, average cost per unit was merely Rs 30.96.

A key lesson here is that of starting early and continuing our SIPs for a long period of time.