HDFC Flex SIP

Flex SIP is a facility whereby investors can invest at predetermined intervals in the eligible schemes of the Fund, higher amount(s) determined by a formula linked to value of investments, to take advantage of market movements. 
 

HDFC Flex SIP, along with inculcating the habit of disciplined investing in a convenient way, also aims to purchase more units when markets are down which generally results in higher wealth as compared to Normal SIP at the end of the Flex SIP tenure. 
 

Yes. The first instalment amount mentioned shall not exceed Rs. 1 Lakh. 
At any given point in time, the subsequent instalment amount determined by the formula shall be capped at 2 times the first Flex SIP instalment amount. Effectively, the subsequent instalments amount i.e. instalments after the 1st installment shall be less than Rs. 2 lakh in any market scenario. 
 

The first Flex SIP instalment will be processed for the fixed amount specified by the Unitholder in the enrolment form. The instalment amount mentioned shall not exceed Rs. 1 Lakh. From the second instalment onwards, the investment amount shall be computed as per the formula stated below. 

The amount to be invested in the Scheme as on the date of SIP shall be higher of: 

• Fixed amount to be invested per instalment; or 
• The amount determined by the formula: (fixed amount to be invested per instalment X number of instalments including the current instalment) – market value of the investments through Flex SIP 2 business days prior to the SIP date.   

Illustration 1: Scenario with a fall in NAV 

Flex SIP Enrolment Details: 

Scheme Name	HDFC XYZ Fund - Growth Option (“the Scheme”)
Installment Date & Frequency of Flex SIP	15th of every month (T)
Fixed Installment Amount	Rs. 5000/-
Number of Installments	36
Total Enrolment Amount	Rs 5000 X 36 = Rs 1,80,000
Period	January 2018 to December 2020

Calculation of Flex SIP installment amount for instance on the date of the fourth installment i.e. April 15, 2018 (T): 

• Total units allotted up to the date of previous instalment i.e. March 15, 2018 is assumed as 685.50; 
• The NAV of the Scheme on April 13, 2018 (T-2) is assumed as Rs. 18/- per unit; 
• Hence the market value of the investment in the Scheme on April 13, 2018 is Rs. 12,339 [685.50 X 18]. 
The installment amount will be calculated as follows: 

Fixed amount specified at the time of enrolment: Rs. 5,000/- 
Or 
As determined by the formula: [(5,000 X 4) – 12,339] = Rs. 7,661 

whichever is higher 

Hence, the installment amount on April 15, 2018 will be Rs. 7,661 

Illustration 2: Scenario with a steeper fall in NAV (Flex SIP Registration details as per illustration 1) 
Calculation of Flex SIP installment amount for instance on the date of the seventh installment i.e. July 15, 2018 (T): 

• Total units allotted up to the date of previous instalment i.e. June 15, 2018 is assumed as 1,558.675; 
• NAV of the Scheme on July 13, 2018 (T-2) is assumed as Rs. 14/- per unit; 
• Hence the market value of the investment as on June 13, 2018 is Rs. 21,821 [1558.675 X 14]. 
The installment amount will be calculated as follows: 
Fixed amount specified at the time of enrolment: Rs. 5,000/- 
Or 
As determined by the formula: [(5,000 X 7) – 21,821] = Rs. 13,179/- 
whichever is higher; subject to 2 times the initial installment amount 
Hence, the installment amount on July 15, 2018 will be Rs. 10,000/- 

At the beginning of HDFC Flex SIP, the investor needs to decide time frame of the Flex SIP. There will be 5 time frames to choose: 

a) 3 years (36 instalments in case of a monthly Flex SIP and 12 instalments in case of a quarterly Flex SIP) 
b) 5 years 
c) 10 years 
d) 15 years 
e) 20 years 
If a time frame is not chosen, 5 years shall be the default Flex SIP tenure. 
Investors will NOT have the option to opt for Perpetual Flex SIP 
 

Total enrolment amount is equal to amount per instalment at the time of enrolment X number of installments. For example, if an investor opts for monthly SIP of Rs 5000 with a 3-year time frame, then the total enrolment amount will be equal to Rs 1,80,000 (5000*36 months). 

Instalment cap w.r.t to total enrolment amount - In the above example, if the total amount invested in Flex SIP the 34 th month is Rs 1,77,000; then the 35 th instalment will be of Rs 3000 (Rs 1,80,000 – Rs 1,77,000) and the Flex SIP will stop. 
 

Under Flex SIP, two frequencies are offered i.e. Monthly and Quarterly. 

If an investor selects more than one instalment date, multiple SIPs will be registered for various dates and frequency will continue to be monthly / quarterly. For example, an investor selects the dates 2nd, 18th and 26th for a monthly Flex SIP in Top 200 Fund, 3 separate monthly Flex SIPs will be registered for the dates 2nd, 18th and 26th. 
 

In the following circumstances, the Flex SIP facility may cease and SIP may be processed for the fixed installment amount specified by the unitholder at the time of enrolment:

(a) If there is a reversal of any SIP installment due to insufficient balance or technical reasons; 
or 
(b) If there is a redemption/ switch-out of any units allotted under Flex SIP. (Units under a Scheme are redeemed on First In First Out (FIFO) basis, irrespective of the mode of allotment). 
 

Flex SIP facility is currently available for all open ended equity schemes and balanced schemes of HDFC Mutual Fund. 
 

No. You can only invest in growth option. 
 

Top-up facility is NOT available under Flex SIP 
 

No, this facility is not available. The tenure needs to be chosen at the beginning of Flex SIP. However, an investor can to start a new Flex SIP at any point in time. 
 

Payments under Flex-SIP can only be made through NACH by registering of One-Time Debit Mandate Form (OTM). Please ensure that the amount mentioned in the OTM is at least twice the First Instalment Amount. 
 

Yes, multiple SIPs can be registered with a single application form. 
 

Under Normal SIP, a fixed amount is invested at the pre-defined intervals. 

Under Flex SIP, the amount invested at the pre-defined intervals depends upon the market movements. Thus, the amount invested will be variable. To better understand Flex SIP in contrast with Normal SIP, the below thumb rule may prove useful. 

Assuming, an investor chooses to initiate monthly installments of Rs. 5,000 under Normal SIP and Flex SIP, the trend of subsequent monthly installments could be determined as below: 

	Flex SIP	Normal SIP
When market moves higher	Rs.5,000	Rs.5,000
When market moves down	Higher, subject to a cap of Rs.10,000	Rs.5,000
When market is flat, hypothetically	Rs.5,000	Rs.5,000

Below table shows results of 5000 per month invested at the beginning of the month in the 5- year time frame under Flex SIP and Normal SIP over the last 22 years. 

CAGR return of 0% to 7% has been classified as Range bound; Underlying for the above back testing is NIFTY 50 INDEX; Value accumulated is as on the last date of respective calendar year. 

It has been observed that wealth created would be higher under Flex SIP as compared to Normal SIP in 100% observations. 

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