Monday, September 28 2026
Source/Contribution by : NJ Publications

It's a Sunday evening. An investor opens the mutual fund app, more out of habit than curiosity, and scrolls down to the SIP that's been running for the past two years. The number in red catches the eye first. Returns are flat, maybe even slightly negative. A quick scroll through news headlines from the week doesn't help either - more talk of market corrections, global uncertainty, and analysts warning of more pain ahead.

By the time the app is closed, a decision has quietly been made. The SIP will be paused this month, maybe stopped altogether, until things "settle down." It feels like a sensible, even cautious, response to a bad run of numbers. However, the data on Indian SIP investor behaviour, and on what equity markets have actually delivered over longer stretches, tells a very different story - one where the investor who stopped that SIP may have just made the costliest decision of their investing journey.

SIP Stoppages Are Climbing Fast

AMFI numbers show the stoppage ratio, SIPs closed as a share of SIPs opened, moving from 52.41% in FY24 to 75.63% in FY25, then 94.51% in FY26. In FY27 (July 2026) so far it has crossed 91%. For every fresh SIP started this year, an existing one is being shut down somewhere else in the system.
Source: AMFI

The timing lines up with a period of flat, volatile markets, which points to investors reacting to a rough patch rather than to any real shift in why they started saving in the first place. Roughly 68% of all SIP AUM in India currently sits in accounts under five years old. Even in regular plans, guided by a Mutual Fund Distributor (MFD), only about 35% of AUM survives past five years. In direct plans it drops to roughly 21%. Most rupees invested through an SIP, in other words, never make it far enough to see the benefit an SIP is meant to deliver.
Source: AMFI, Data as of June 2026

What Actually Drives Short-Term Volatility

Equity is ownership in real businesses, and business earnings don't move in a straight line. Interest rate cycles, input costs, global capital flows, sentiment swings - these push prices around within any given year, often more than actual earnings do. That's why a one-year return can land anywhere from sharply negative to strongly positive with little rhyme or reason to it. Short-term ups and downs aren't a sign that something's broken - they're just how equity behaves.

The Risk Numbers, by Holding Period

BSE Sensex rolling returns, January 2001 to December 2025, put this on paper:

Source: BSE, daily rolling returns, Jan 2001–Dec 2025.

At one year, roughly one in five outcomes has been a loss, with the worst single case wiping out more than half the money. Cross seven years and the loss probability across the whole dataset drops to zero. By twenty years, even the worst-recorded outcome came in at a positive double-digit CAGR. A separate check on timing tells a similar story: an investor with the worst possible luck, always buying at the annual peak over 25 years, still earned 11.95% CAGR. The luckiest investor, always buying at the annual bottom, earned 14.51%. That’s a gap of just 2.56% between the worst and best case. Staying invested carries far more weight than getting the entry point right. Source: BSE, Jan 2001 – Dec 2025 | 25 years I SIP of Rs. 10,000/- and every year lump sum in highest and lowest value Rs. 1,20,000/-

Two Things Improve Together, Not One at a Time

Longer holding periods don’t just push the odds of a loss toward zero. The same years are doing the heavy lifting on compounding. Take a ₹10,000 monthly SIP, assumed to grow at 12% CAGR, roughly in line with the Sensex numbers above:

Note: Assuming an average return of 12.62% p.a. as per AMFI Best Practice Guidelines Circular No. 109-A/2024-25 dated September 10, 2024.Past performance may or may not be sustained in future and is not a guarantee of any future returns.

Between year 10 and year 20, the invested amount just doubles, going from ₹12 lakh to ₹24 lakh. The estimated value grows over four times, crossing close to ₹91 lakh. This is the same stretch where loss probability had already hit zero. So the choice isn’t really between safety and growth. Holding on longer tends to hand you both.

What Stopping Actually Costs

Between October 1999 and April 2026, the Nifty returned 11.54% CAGR. The average investor over that same window earned around 9.04%, a shortfall of roughly 2.5 percentage points a year. The market didn’t cause that gap. Behaviour did - panic selling during corrections, SIPs stopped mid-downturn, re-entry only after the recovery was already underway and the cheap prices were gone.
Source: NSE, AMFI

The Takeaway

A rough one or two years in equity markets isn't new information - it's exactly the kind of short-term outcome the data already expects, one that fades the longer an SIP is allowed to run. For those already invested, understanding this is what lets compounding do its job, quietly turning falling risk and rising returns into one story instead of two. Before acting on a rough patch, it's worth talking to an MFD first - a quick conversation can separate a genuine change in circumstance from ordinary market noise, often making the difference between staying the course and giving up right before the numbers were about to turn.

The information contained herein is only for information and does not constitute, and should not be construed as investment advice or a recommendation to buy, sell, or otherwise transact in any security or investment product or an invitation, offer or solicitation to engage in any investment activity. Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Friday, September 19 2025
Source/Contribution by : NJ Publications

The world of investing is changing rapidly, and at the heart of this transformation lies Factor-based Funds - a new-age approach where mathematics, data, and algorithms take the driver’s seat. Unlike traditional funds that rely heavily on human judgment, Factor-based Funds use sophisticated models to analyze vast amounts of financial data and identify patterns invisible to the human eye. The goal is to make consistent, calculated investment decisions by mitigating the influence of human biases and emotions.

Think of it as a research team that never sleeps - scanning thousands of company reports, market movements, and global indicators simultaneously, all without emotion. The result? Investment decisions are objective, systematic, and data-driven.

Why Factor-based Funds are Gaining Popularity

• Transparency & Discipline - Decisions are based on rules, not gut feelings.

• Eliminating Bias - Human emotions often cloud judgment; algorithms don't.

• Accessibility - Growing computing power and data availability have made Factor-based strategies mainstream.

• Consistency - Factor-based models aim for steady performance across market cycles.

How Do Factor-based Funds Work?

Factor-based funds build their portfolios by employing a factor investing strategy. This means they select securities based on specific, return-driving characteristics, or "factors," such as:

• Value: Targeting stocks priced lower than their intrinsic value, using metrics like the price-to-earnings (P/E) ratio.

• Momentum: Capitalizing on the trend of stocks that have recently outperformed, based on the observation that strong past performance often continues in the short to medium term.

• Quality: Focusing on companies with strong financial fundamentals, such as high profitability and low debt levels.

• Size: Recognizing the historical tendency for smaller companies to outperform larger ones over the long term.

• Low Volatility: Selecting stocks with lower price fluctuations to provide stable returns and reduce risk.

The models used by Factor-based funds are rigorously back-tested against historical market conditions to ensure their robustness. A fund may use a single factor or combine multiple factors to build a diversified portfolio.

Different Types of Factor-based Funds

1. Single-Factor Funds - These funds focus on one particular factor when choosing stocks. A Value Factor Fund may only pick stocks that look undervalued If that one factor does well, the fund performs strongly. But if the factor struggles, returns may be weak.

2. Multi-Factor Funds - Instead of relying on one factor, these funds combine two or more factors (like value + momentum, or quality + low volatility). A fund might buy only those companies that are both undervalued (value) and have low debt (quality). This helps balance risks - if one factor underperforms, another may support the portfolio.

3. Quantamental Funds - These funds combine the power of algorithms with human insights. The computer screens thousands of stocks using rules, but the fund manager may apply judgment before final selection.

4. Active Smart Beta Funds - Active Smart Beta strategies uniquely blend the rigorous discipline of rule-based investing with the adaptable nature of active management. While these funds utilize a systematic, factor-based approach, a crucial differentiator is the fund manager's discretion in defining the rules governing portfolio construction. This inherent flexibility in tailoring and evolving these rules provides Active Smart Beta funds with enhanced potential to outperform traditional factor indices over time.

5. Passive Smart Beta Funds - These are index-linked Factor-based strategies (often via ETFs or index funds) that may use alternative weighting - based on factors like value, low volatility, or momentum - instead of market cap.

What It Means for Investors

Factor-based Funds open new doors for investors who want to:

• Minimize bias in decision-making

• Gain exposure to disciplined factor-based investing

• Access strategies once limited to global hedge funds

• Build portfolios that are adaptive, data-driven, and future-ready

In short, Factor-based Funds are not just a passing trend. They represent the future of investing, where human intuition and machine intelligence come together to create smarter, more resilient portfolios.

Disclaimer: Mutual Fund investments are subject to market risks, read all the scheme related documents carefully.

Monday, August 19 2026
Source/Contribution by : NJ Publications

Pull out your SIP mandate from ten years ago and your salary slip from this month, and lay them side by side. One of those numbers has grown quietly, year after year. The other hasn't moved at all.

Take a professional who started a SIP of Rs. 20,000 a decade ago, on a monthly salary of about Rs. 1,00,000. A fifth of the paycheck, going out automatically every month - a genuine commitment at the time. Salaries in most careers climb somewhere around 10% a year, between increments and the occasional job change, and ten years of that compounding takes the same salary to roughly Rs. 2,50,000. The SIP, meanwhile, still reads Rs. 20,000.

A SIP That Stopped Keeping Up

Nobody sat down and decided to invest less. The bank instruction from ten years ago simply never got revisited, while the number it was once a fifth of kept climbing on its own. Do the arithmetic and the SIP has quietly slipped from 20% of income to around 8%. Had it grown at the same pace as the salary, it would be closer to Rs. 50,000 a month today - not Rs. 20,000.

It isn't only investors who never touch their SIP who fall behind, either. Plenty do revisit it every few years and bump it up - Rs. 20,000 becomes Rs. 25,000, say, and it feels like a real step up. But measured against what the income has actually grown by, a jump of a few thousand rupees is still nowhere close to the Rs.50,000 the numbers call for. The increase happened; it just wasn't sized to the actual growth behind it.

A financial need doesn't really care how the SIP was originally sized. A child's education or a retirement corpus has a cost and a rough date attached to it, set mostly independent of whatever felt reasonable in year one. If the SIP isn't moving while income is, the shortfall between the two builds up steadily, without any single decision along the way that felt like a compromise.

What a Top-Up Actually Does

A SIP Top-Up closes exactly that gap - increasing the instalment by a fixed amount or percentage at set intervals, so the plan keeps pace with what you're actually able to set aside, rather than what you could afford a decade ago.

The Numbers

On a Rs. 10,000 SIP with a Rs. 2,000 annual Top-Up, assuming the 12.62% long-term average AMFI's own guidelines use for equity funds:

Assuming an average return of 12.62% p.a. as per AMFI Best Practice Guidelines Circular No. 109-A/2024-25, dated September 10, 2024. Past performance may or may not be sustained in future and is not a guarantee of future returns.

Two things follow from that, in practice. Financial needs get met sooner, since more of a rising income is actually reaching them each year instead of the fixed sum agreed to long before. And the corpus ends up larger, since each additional instalment gets whatever runway is left to compound. None of it needs a fresh decision each year - the increase sits inside the plan the same way the original SIP did.

Advantages of a SIP Top-Up

• Reach financial needs sooner - a rising instalment shortens the time it takes to hit a fixed target, so the same corpus arrives years earlier than it would on a flat SIP.

• Build a higher corpus - over an identical tenure, the extra instalments plus compounding add up to a meaningfully larger final corpus.

• Stay systematic - the increase is scheduled and automatic, the same disciplined way the original SIP was set up, with no fresh decision required each year.

• Keep pace with rising income - savings grow proportionately as earnings grow, instead of quietly shrinking as a share of what's being earned.

Where This Leaves You

If your income has grown since you started a SIP - and for most people, it has - a fairly simple question follows: has your investment grown with it? Where it hasn't, that's rarely because of anything done wrong, just a plan set once and left alone a little too long. A small increase, added regularly, tends to be enough to close the gap.

Mutual fund investments are subject to market risk. Please read all scheme-related documents carefully before investing. Past performance may or may not be sustained in future and is not a guarantee of future returns. This article is for investor education purposes only and does not constitute investment advice. Please consult your mutual fund distributor before making any investment decision.

Friday, May 9 2025
Source/Contribution by : NJ Publications

Dodging Investment Traps: How to Pick the Right Mutual Funds 

By: NJ Team

Investing in mutual funds? Congratulations! You're on a path to potentially building a solid financial future. But, like navigating a minefield, the journey is fraught with potential pitfalls. Many investors, both beginners and experienced, fall into common traps that hamper their wealth building journey. In this article we will illuminate the common traps and guide you towards smarter investment decisions.

1. Chasing Past Performance: The Rearview Mirror Trap

"Past performance is not indicative of future results."

You've heard it a million times, but do you truly internalize it? Many investors fall prey to chasing funds that have delivered stellar returns recently. While a fund's track record is important, it's crucial to understand why it performed well. Was it a fluke? A sector boom? A temporary market anomaly?

Don't let a flashy past blind you to the fundamentals. Just because a fund performed well last year doesn’t mean it will continue to do so. Instead, look at long-term consistency and factors like fund management, investment strategy, and market conditions. A good distributor can provide valuable insights and help you avoid chasing fleeting trends.

2. Over-Diversification or Under-Diversification

Some investors spread their money across too many funds, creating excessive overlap in holdings and reducing potential gains. As Warren Buffett famously said, "Wide diversification is only required when investors do not understand what they are doing." But underdoing it can expose you to high risk. The key is balance. Find a mix that provides stability while still allowing for growth. A distributor can help you build a diversified portfolio without overcomplicating things.

3. Neglecting Your Risk Tolerance: Riding a Rollercoaster Without a Seatbelt

Are you a thrill-seeker, or do you prefer a smooth, predictable ride? Your risk tolerance should be the compass guiding your investment decisions. Many investors chase high returns without considering the potential downsides. When the market dips, they panic and sell at the bottom, locking in losses.

"The investor's chief problem – and even his worst enemy – is likely to be himself," warned Benjamin Graham. Understand your risk tolerance and choose funds that align with it. If you're risk-averse, consider more conservative options like balanced funds. If you have a longer time horizon and a higher risk appetite, you might consider equity funds. A qualified distributor can assess your risk tolerance and recommend funds that match your profile.

4. Timing the Market: The Fool's Errand

"Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves," said Peter Lynch. Many investors believe they can time the market, buying low and selling high. However, consistently predicting market movements is virtually impossible. Trying to time the market is a futile exercise.

Instead of trying to predict market fluctuations, focus on a long-term investment strategy. Rupee cost averaging, where you invest a fixed amount regularly, can help smooth out market volatility. A distributor can reinforce the importance of long-term investing and discourage attempts at market timing.

5. Not Understanding the Fund’s Strategy

Every mutual fund has a specific investment strategy, whether it’s growth, value, income, or sector-based. Investing without understanding the fund’s strategy can lead to unexpected risk exposure. Always read the fund’s offer document and ensure it aligns with your investment needs and risk tolerance.

6. Overlooking the Role of a Distributor

A mutual fund distributor plays a crucial role in helping investors select the right funds. Distributors provide valuable insights, recommend funds based on an investor’s risk profile, and assist with the paperwork and operational aspects of investing. However, it’s essential to choose a distributor who prioritizes your financial needs over commissions. A distributor can help ensure that your investments align with your financial objectives.

Final Thoughts

Mutual funds offer an excellent way to invest, but avoiding these pitfalls is crucial for long-term success. By focusing on asset allocation fund strategies, diversification, and staying disciplined, you can build a strong portfolio that stands the test of time. Remember, investing is not about beating others at their game, but about controlling yourself at your own game, and your distributor is your valuable teammate.