InvestorQ : What is a smart SIP in mutual funds and it’s good to invest?
Lavanya Subramanian made post

What is a smart SIP in mutual funds and it’s good to invest?

Answer
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Niti Shenoi answered.
6 months ago


Smart SIP is a new addition in the SIP under mutual funds. Presently, there are only one or two market participants who are offering the option of SmartSIP to retail investors. It is a simple yet very innovative mutual fund product. Under this, investments are done automatically either in liquid schemes or equity schemes based on the signals generated by considering the margin of safety of the index.

Basically, smartSIP is customized to invest automatically in liquid schemes when the market is expensive, and when the market is lower, the investment is shifted to equity, and hence the investment in equity is doubled. SmartSIP is better than the normal SIP because SIP is not smart investing, it is just simply disciplined automated investing.

Features of SmartSIP:

Smart SIP invests your Monthly SIP amount in Equity Mutual Funds when the markets are fairly valued and doubles that monthly SIP investment when markets are undervalued. It skips investment in equity scheme units and parks the SIP amount in liquid mutual fund scheme and later it is used to buy equity mutual fund units when markets become inexpensive.

It skips investments in equity schemes when markets are expensive and books profit on part of existing equity units when markets are very expensive. The sale proceeds that would be received shall be used to make an investment under Liquid schemes. So, yes it is better to invest under Smart SIP rather than normal SIP if you are looking for an automated investment option.