Stories
WhiteOak MF Reveals Whether to Continue SIP After Weak Start
- •A historical analysis by WhiteOak Capital Mutual Fund examined the impact of market timing, investment horizons, and frequencies on SIP returns.
- •Longer investment horizons significantly reduced the risk of losses, with 100% of eight, 10, 12, and 15-year SIPs yielding positive returns.
- •Starting an SIP earlier, even near a market peak, often led to greater accumulated wealth compared to waiting for a market correction due to extended compounding.
- •The choice of SIP date and frequency showed negligible differences in long-term returns over the study periods.
- •SIPs that experienced weak starts in their first five years often rebounded to deliver stronger average returns over a 10-year period.
Key Questions Answered
Yes, longer investment horizons show a higher proportion of positive returns. WhiteOak Capital MF found that monthly Sensex TRI SIPs generated positive returns in 87% of three-year rolling periods, 92% of five-year periods, and 100% of investment horizons lasting eight, 10, 12, and 15 years.
Starting an SIP earlier, even near a market peak, can lead to greater accumulated wealth due to additional contributions and a longer compounding period, often outperforming those who wait for a market bottom.
The choice of SIP date and frequency makes little to no difference to long-term returns. WhiteOak Capital MF's analysis showed that 10-year SIP returns varied minimally across different dates of the month, and daily, weekly, and monthly frequencies yielded identical annualised returns.
