Always a good time to start an SIP

There are 8 commonly used question words in English viz. what, where, when, which, why, who, whose, how. When it comes to the world of investing though, most dwelled upon questions are ‘when’ and ‘where’.

Over the past few years, ‘Where’ to invest has been addressed by the wide array of Mutual Funds, which have become popular for long-term wealth creation of investors. Likewise, increasing SIP flows indicate that the question of ‘How’ has been cracked too. However, the question of ‘when’ still lingers in the mind of investors. One still encounters a large number of investors who wonder if it’s the right time to start an SIP or if they should delay the SIP till better clarity emerges on market direction, macro cues etc. This question of ‘when’ is actually counter-intuitive in SIPs as the main idea of starting an SIP is to eliminate the need to time the market.

A good example of how starting SIP early, investing regularly and staying invested helps in long term wealth creation' in case of HDFC Mid-Cap Opportunity Fund is given below. The Scheme was launched in June 2007 and has witnessed key market events over the years.

Take the event of Global Financial Crisis (GFC) of 2008 where NIFTY corrected by almost 60% in a span of 9 months (Jan'08 to Oct'08). There could have been investors who would have started an SIP near the peak in Jan'08 and some who would have started one closer to the bottom in Nov'08.

How differently would they have fared had they continued the SIP till today?

SIP from GFC peak (From Jan'08 till Sep'23)

*As of 30-September-2023, SIP of Rs 10,000 on first day of month considered

SIP from GFC Bottom (From Nov'08 till Sep'23)

*As of 30-September-2023, SIP of Rs 10,000 on first day of month considered

Common disclaimer for both the tables: For complete performance details, refer Page 5. Past performance may or may not be sustained in future. HDFC AMC is not indicating / assuring any returns on investments.

As can be seen from tables above, whether an investor started an SIP near the GFC peak or GFC bottom, an investment in HDFC Mid-Cap Opportunities Fund would have yielded good returns (19.9% and 20.2% CAGR respectively).

Whether investors started an SIP when NIFTY was above 6,000 in Jan'08 or when NIFTY was close to 3,000 in Nov'08 didn't have a material bearing on their SIP returns over the long term. If at all anything, the delay on account of waiting for the bottom and starting the SIP later would have resulted in less wealth creation to the tune of ~14 lakh (Rs109.4 Lakhs vs Rs 95.8 Lakhs). In contrast, invested amount would have been lower by only Rs 1 lakh (Rs 18.9 Lakhs vs Rs 17.9 Lakhs or Rs 10,000*10 installments).

To conclude

• Investors need not worry about market levels as long as they are taking the SIP approach
• Starting the SIP and more importantly persisting with it is more important then when you start it.
• Staying invested for long term can help to compound wealth, irrespective of intermittent market volatility.

Thus, the only thing that one needs to be mindful of is the SIP Mantra – Start early, invest regularly, stay invested.

Past performance may or may not be sustained in future. HDFC AMC is not indicating / assuring any returns on investments.

A. HDFC Mid- Cap Opportunities Fund - SIP Performance - Regular Plan - Growth Option

Past performance may or may not be sustained in the future. Assuming ₹10,000 invested systematically on the first Business Day of every month over a period of time. CAGR returns are computed after accounting for the cash flow by using XIRR method (investment internal rate of return) for Regular Plan - Growth Option. The above investment simulation is for illustrative purposes only and should not be construed as a promise on minimum returns and safeguard of capital. SIP - Systematic Investment Plan.

B. HDFC Mid- Cap Opportunities Fund - Performance - Regular Plan - Growth Option NAV as at September 29, 2023 ₹ 132.024 (per unit)

#NIFTY Midcap 150 (Total Returns Index) ##NIFTY 50 (Total Returns Index). *Inception Date: June 25, 2007. The scheme is managed by Mr. Chirag Setalvad since June 25, 2007.

C. Performance of Other Funds Managed by Mr. Chirag Setalvad, Fund Manager of HDFC Mid-Cap Opportunities Fund (who manages total 4 schemes)

¥ The scheme is co-managed by Mr. Chirag Setalvad (Equity Assets) (since April 2, 2007) and Mr. Anupam Joshi (Debt Assets) (since October 6, 2022). § The scheme is co-managed by Mr. Chirag Setalvad (Equity Assets) (since April 2, 2007) and Mr. Anil Bamboli (Debt Assets) (since October 6, 2022). On account of difference in the type of the Scheme, asset allocation, investment strategy, inception dates, the performance of these schemes is strictly not comparable.

Common notes for Table B & C: Past performance may or may not be sustained in the future. Returns greater than 1 year period are Compounded Annualised (CAGR). Load is not taken into consideration for computation of above performance(s). Different plans viz. Regular Plan and Direct Plan have different expense structure. The expenses of the Direct Plan under the scheme will be lower to the extent of the distribution expenses/commission charged in the Regular Plan. Returns as on September 29, 2023. The above returns are of Regular Plan - Growth Option.

#For latest riskometer, investors may refer to the Monthly Portfolios disclosed on the website of the Fund viz. www.hdfcfund.com

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.