Journey of a Mutual Fund SIP: HDFC Top 200

Published: May 19, 2015 at 1:06 pm

I am trying to build an automated  monthly XIRR tracker for mutual fund SIPs with respect to a benchmark. This will help us understand how returns from a SIP can fluctuate and how consistently the fund has performed with respect to its benchmark. The automation is not yet complete but since I found a good a good  SIP account statement generator since inception (link given below), here are some results for HDFC Top 200.

Monthly XIRR tracking since inception (Sep. 1996)

 

HDFC-top-200-xirr-1a

Since XIRR is not reliable for investments less than a year old, XIRR data for the first 12 SIP installments is not included.

The graph suggests that although the XIRR tracks the general market movement, the fluctuations die down after 5+ years.

Correlation with NAV movement: Positive. About 34%

The fall during the 2008 crash is about 15% or so.

Let us look at the monthly XIRR had the SIP been started at each of the three arrows above.

Monthly XIRR tracking since Jan. 2004

HDFC-top-200-xirr-2a

For a SIP started after the last bull run had begun,  the fall during the 2008 crash is much higher ~ more than 20%. Here again the fluctuations die down after a few years.

Correlation with NAV movement: negative! Not sure how to interpret that.

Monthly XIRR tracking since Nov. 2007

HDFC-top-200-xirr-3a

 

This is for a SIP begun right before the 2008 crash.  Recall that XIRR data for the first 12 SIP installments is not included.

Correlation with NAV movement: Positive. 15%

Monthly XIRR tracking since Oct. 2010

HDFC-top-200-xirr-4a

This is for a SIP started after the market bounced back after the 2008 crash.

Correlation with NAV movement: Obviously positive and large. 91%

Impression: Do the above graphs suggest that although the XIRR of a SIP investment broadly follows market movements, its volatility decreases with age? For all our sakes, let us hope so.

Here is a similar study for Franklin Blue Chip: Tracking a mutual fund SIP: Month by month XIRR

The automated tracker can only analyze investments from 3rd April 2006. I will add a comparison with a lump sum investment.

The SIP account statements for this post were generated using this SIP calculator

http://www.bluechipindia.co.in/MutualFund/MFInner.aspx?id=7

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