Mumbai: FundsIndia, the country’s largest retail investment platform, announced today that it is launching FundsIndia SmartSIP, in association with Franklin Templeton AMC, for its customers. This first-of-its-kind service combines the discipline of SIP along with dynamically managing the monthly SIP allocation to each fund based on market conditions.
SmartSIP invests in an equity fund and a debt fund, from the Franklin India stable, every month. By default, the equity fund’s allocation would be 70% and the debt fund would receive 30%. However, allocation to the equity fund and the debt fund will dynamically change every month based on both market fundamentals and momentum factors.
FundsIndia’s co-founder and COO Srikanth Meenakshi spoke about the need for this product in the market – “At FundsIndia, we have been listening to what our investors are seeking for a decade now, and this product grew out of understanding these requirements. With SmartSIP, an investor can make smart allocations between equity and debt every month based on the signals we receive from a well-proven quantitative model. And what’s great is that this adjustment does not disturb the investor’s monthly savings. There’s no need to increase SIP amount or reduce it in order to benefit from dynamic allocation. This ensures that savings are disciplined and there is no compromise on reaching the desired goal”.
Vidya Bala, FundsIndia’s head of mutual fund research, elaborated further – “There are various factors to consider when deciding an asset allocation that takes advantage of market conditions. This dynamic model developed by experts shows back-tested capability of beating a regular 70:30 SIP by up to 2.6% CAGR over the long term. This is possible because the model seeks to reduce fresh equity allocation and increase debt allocation in a market turning expensive and increase equity allocation in correcting markets. The product reduces an investor’s urge to time the market. More importantly, it contains downside risks better than a static portfolio.”
Mr. Sanjay Sapre, President, Franklin Templeton Investments – India, on the association said, “SmartSIP is a prudent move by FundsIndia to offer asset allocation solutions to investors vis-à-vis pure products. India is still a very nascent market for mutual funds as we have only tapped about 2% of the population. A majority of potential Indian investors still have an assured returns mindset and look at mutual funds for the higher returns but lack the risk appetite for market volatility. SmartSIP, a solution which offers a combination of market upside coupled with a potential downside risk limitation, will help to reassure investors to stay invested over longer timeframes. Through SmartSIP, we believe our partnership with FundsIndia, one of the largest online mutual fund investment platforms, will enable us to build scale in a more meaningful manner.”
From an investor’s perspective, this service will be quite simple to use. There will be a single amount being debited from their bank account and the same will be dynamically invested in the SIP funds. The set-up and monthly allocations will be taken care of by the system and the investor will be aware of how much money goes to each fund, every month.
“This provides twin benefits to the investors”, said C R Chandrasekar, CEO of FundsIndia. “Our customers are always worried about two things – one, whether they are investing in the right funds, and two, whether they are investing right in the current market. This solution addresses both questions in an objective, impartial manner. They always ask ‘How do I build wealth without incurring more risk?’ We have tried to find the answer using mutual funds and a quant model to guide the allocation dynamically. That it does so in the context of the simple SIP structure is an added bonus”.