Lessons from my SIP in Sundaram Select Midcap Fund

Published: March 11, 2018 at 11:23 am

Last Updated on December 28, 2021 at 6:33 pm

I have Rs. 500 SIP running in Sundaram Select Midcap fund since Aug 2009. As readers may recall*, this is not for me, but for a relative, started when she was about one for her college. Here are some lessons from that investment. I was using this to prepare slides for a “basics of money” corporate meet next week and I thought this might warrant a post.

* See: Stock Market Overheated? Worry About What is Invested and Not When to Invest!

Why Sundaram Select Midcap Fund? It was (when I started) and is a reasonably consistent, but quiet midcap fund, though with a poor last 3Y. This is the only investment for that goal and is significantly more risky than the funds I use for my retirement and my son’s education.

Yes, it is a foolhardy all-or-nothing kind of strategy using a 100% equity midcap for a clear well-defined goal, but I wanted to take the risk. If it fails, I will have to compensate for it from other sources.


Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥

I do not use SIPs for my goals, but wanted an automated solution for this. Come rain or shine, I did not want to stop contributing. Also, the contribution is quite small. Your aim should be to invest as much as possible each month and manual investing is better than investing for that.

PLEASE DO NOT INVEST IN THE FUND WITHOUT UNDERSTANDING RISKS! It is an extremely volatile fund. Not a recommendation.

Rs. 500 SIP in Sundaram Select Midcap from Aug 2009

Start date: 31-08-2009

Monthly investment: Rs. 500

Time: 102 months or 8.5 years

Total investment so far: 500 X 102 = Rs. 51,000

Current Value = Rs. 1,24,929

Annualized return: 20.7%

For the purpose of illustration, I have used the “regular fund”(with commissions taken off fund value). Since I was a “direct-with-AMC” investor even before the advent of direct plans, my SIP was automatically transferred to direct plans by the AMC from Jan 2013 and I had gradually shifted the regular units to direct soon after. Due to this, the actual value of my investment is about Rs. 5000 more and return about 1% more.

Note: If you stuck with regular units, switch out all such units that qualify for LTCG before March 31st. Thanks to Sridhar Venkatarajan (who incidentally is a patron of freefincal even before it started), I learnt yesterday in FB group, Asan Ideas for Wealth that you can direct the bank to stop regular fund SIP ECS mandates. No need to go in person to the AMC. No need to deal with distributors.

SI{P in Sundaram Select MIdcap growth

Notice that for the first four years after starting the value of the investment is zero.  Excusing me for laughing when I see 3-month old SIP investors in AIFW “worried about the recent fall in markets”. You can see that fall in the above graph (extreme right).  If you want returns, you need to take risks and be patient, pal.

The moral of this post is NOT patience will be rewarded. Do not get me wrong. I not a SIP sales guy to say “everything will turn out okay, in the end”. It will not.

There are two lessons from the above graph. equity will not reward anyone consistently. There will years of drought and then sudden floods (post Sep 2013). And now again, with only a year to go to elections again, we can expect a sideways movement for a year or so.

So the investment value will not move up much and with a large crash can come down back to the blue line. SeeBeware of Misinformation: Mutual Fund SIPs Do Not Reduce Risk!

And: Don’t get too comfortable with equity: This is how a real market crash “feels” like

And: How can a 400% profit result only in 8% return?! Hodling to the moon Risk! 

Annual returns from the SIP

These are the kind of ups and downs the investment had to endure.

It is a pretty rocky ride. Get used to it or you will get hurt.

Month-by-month XIRR tracking

Using the monthly XIRR tracker we can see how returns have varied after each instalment.

Lesson: If after 6 months of investing, your returns are ~ 60%, be sure that they will reduce and react to market movements no matter hold the investment.

Now, let us look at three imaginary SIPs

SIP started in March 2014

SIP started in Mar 2016

Notice that the recent fall looks a bit “bigger” for SIPs started recently? The only way to stop worrying is to not look at the portfolio each day. Even once a year is bit often for goals decades away.  We must “look” to manage risk, but should also know “when to look”. For a goal 15 or 20Y away, leave your portfolio alone for the first 3-5Y. You can then worry about rebalancing, fund performance etc.

SIP from April 2006.

This is the longest that I can backtest

Notice that in Aug 2013, after about 7Y after starting the investment, the value almost became equal to the invest. This is the risk with mid, small, micro and nano cap funds. Also even after 12 years, the value reflects the “fall” post budget 2018. This is because SIPs do not reduce risk. The value of 2.5L faces the full market risk and the so-called “averaging benefit” of SIP will not help in any way.

Remember: A Mutual Fund SIP is Hope, Not a Strategy!

Do share this article with your friends using the buttons below.

🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 5000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! More than 1,000 investors and advisors use this!
New Tool! => Track your mutual funds and stock investments with this Google Sheet!
Follow Freefincal on Google News
Follow Freefincal on Google News
Subscribe to the freefincal Youtube Channel. Subscribe button courtesy: Vecteezy.
Subscribe to the freefincal Youtube Channel.
Follow freefincal on WhatsApp Channel
Follow freefincal on WhatsApp
Podcast: Let's Get RICH With PATTU! Every single Indian CAN grow their wealth! 
Listen to the Lets Get Rich with Pattu Podcast
Listen to the Let's Get Rich with Pattu Podcast
You can watch podcast episodes on the OfSpin Media Friends YouTube Channel.
Lets Get RICH With PATTU podcast on YouTube
Let's Get RICH With PATTU podcast on YouTube.

  • Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
  • Have a question? Subscribe to our newsletter with the form below.
  • Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.

Join over 32,000 readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email!

Explore the site! Search among our 2000+ articles for information and insight!

About The Author

Pattabiraman editor freefincalDr. M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter, Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!   
Our new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both the boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision-making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, what would it be if we had to groom one ability in our children that is key not only to money management and investing but to any aspect of life? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parents plan for it and teach him several key ideas of decision-making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & it's content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)