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Risk in SIP: Assessment of Risk in SIP Investment

Updated on October 17, 2020 , 9923 views

The risk in SIP varies for different Types of Mutual Funds. investing in Mutual Funds via SIP (Systematic Investment plan) involves market linked risks, that are certainly higher for Equity Funds than debt and balanced Mutual Funds. The risk in SIP depends on the investment option that is chosen considering the risk profile, risk appetite and liquidity. However, the risk in SIP can be managed and reduced by the fund managers and the fund house.

To calculate the risk in SIP there are various tools available like sip calculator (also known as SIP return calculator).

Risk in SIP: Assessment of SIP Risks

Risk 1: The risk of SIP getting a negative return or price risk

Mutual fund investments are subject to market risks, is a commonly heard term. What this means is that your investment in a SIP can go down and you can end up with a value lower than what you invested depending on how the market behaves.

The risk in SIP is however related to the holding period and usually, the longer the holding period, the lower the risk. With higher holding period the probability of making profit increases. For e.g. have a look below for equity, a longer holding period for equity results in a lowering chance of loss. (The below is an analysis done on the BSE Sensex from 1979 to 2016).

Risk 2: The risk being able to get your money back quickly or liquidity risk

The ability to get your money back quickly depends on the underlying investments. Usually with mutual funds, this is not an issue, however, there have been periods (such in 2008), when there was an issue in selling securities(Bonds) and that certain mutual funds had to limit withdrawals from some schemes. The equity market is fairly liquid (meaning that buying and selling do not pose an issue). However, if the sale quantity exceeds the numbers of buyers by a large amount, then this will result in an issue, hence making subsequent payouts a problem and hence liquidity risk.

Risk 3: The risk of downgrade of a security or credit risk

When the bond of a particular company/entity undergoes a downgrade by a credit rating agency, its price falls. If the price falls, this impacts the overall value of the portfolio. This is called credit risk.

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Risk 4: The risk of the company not paying the owners of the bond their due or default risk

When a company defaults on its payments to the bond holders, it’s called default risk.

With the investor not getting their money back, this will impact their portfolio, negatively.

Risk 5: The risk of processing your transaction correctly or technology risk

Today, all transactions take place in the electronic mode. With the various touch-points, there is a possibility of a technological failure at various places, at the R & T Agent, the bank to debit funds etc.

The non-processing of a transaction is also a risk in SIP.

Risk 6: The risk of scheme performance by the portfolio manager or fund management risk

Another risk in SIP is that the chosen scheme may not deliver upto expectations, and performance may be much lower than expected. The Fund Manager may under-deliver on performance, and this will lead to low returns on the SIP investment.

These are the major risks in a SIP, while we can go on and elaborate further risks in SIP like economy risk etc., most of these risks would fall under one or more of the categories above.

Though there is definitely a risk in SIP, one should always remember that SIP or lump sum, this is just an investment route and NOT the underlying investment. One needs to look at the underlying investment, its risks, and then make a final decision.

*Below is the list of Top SIP's one can evaluate to invest in

1. TATA Digital India Fund

The investment objective of the scheme is to seek long term capital appreciation by investing atleast 80% of its net assets in equity/equity related instruments of the companies in Information Technology Sector in India.However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved.The Scheme does not assure or guarantee any returns.

TATA Digital India Fund is a Equity - Sectoral fund was launched on 28 Dec 15. It is a fund with High risk and has given a CAGR/Annualized return of 16.1% since its launch. Return for 2019 was 7.5% , 2018 was 24.9% and 2017 was 19.6% .

Below is the key information for TATA Digital India Fund

TATA Digital India Fund Growth
Launch Date	28 Dec 15
NAV (19 Oct 20)	₹20.4791 ↓ -0.02 (-0.10 %)
Net Assets (Cr)	₹540 on 30 Sep 20
Category	Equity - Sectoral
AMC	Tata Asset Management Limited
Rating	Not Rated
Risk	High
Expense Ratio	2.05
Sharpe Ratio	0.81
Information Ratio	-0.36
Alpha Ratio	0.1
Min Investment	5,000
Min SIP Investment	500
Exit Load	0-3 Months (0.25%),3 Months and above(NIL)

Growth of 10,000 investment over the years.

Date	Value
30 Sep 16	₹9,330
30 Sep 17	₹9,585
30 Sep 18	₹15,366
30 Sep 19	₹15,028
30 Sep 20	₹19,395

TATA Digital India Fund SIP Returns

Total investment amount is ₹300,000
expected amount after 5 Years is ₹584,107.
Net Profit of ₹284,107 Invest Now

Returns for TATA Digital India Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20

Duration	Returns
1 Month	7.7%
3 Month	27.9%
6 Month	66.9%
1 Year	36.3%
3 Year	26.9%
5 Year
10 Year
15 Year
Since launch	16.1%

Historical performance (Yearly) on absolute basis

Year	Returns
2019	7.5%
2018	24.9%
2017	19.6%
2016	-6%
2015
2014
2013
2012
2011
2010

Fund Manager information for TATA Digital India Fund

Name	Since	Tenure
Rahul Singh	20 Apr 20	0.45 Yr.
Meeta Shetty	20 Apr 20	0.45 Yr.

Data below for TATA Digital India Fund as on 30 Sep 20

Equity Sector Allocation

Sector	Value
Technology	91.66%
Communication Services	2.94%

Asset Allocation

Asset Class	Value
Cash	6.42%
Equity	94.6%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Infosys Ltd (Technology) Equity, Since 31 Jan 16 \| INFY	30%	₹160 Cr	1,585,000 ↓ -200,000
Tata Consultancy Services Ltd (Technology) Equity, Since 31 Jan 16 \| TCS	12%	₹66 Cr	265,000 ↓ -60,000
Persistent Systems Ltd (Technology) Equity, Since 31 Jan 16 \| PERSISTENT	10%	₹53 Cr	398,200 ↑ 47,000
HCL Technologies Ltd (Technology) Equity, Since 31 Jan 16 \| HCLTECH	7%	₹38 Cr	473,000 ↓ -137,000
Wipro Ltd (Technology) Equity, Since 31 Jul 18 \| 507685	7%	₹37 Cr	1,176,000
MindTree Ltd (Technology) Equity, Since 31 Jul 19 \| 532819	5%	₹27 Cr	200,000 ↑ 42,000
Birlasoft Ltd (Technology) Equity, Since 31 Jul 20 \| 532400	4%	₹24 Cr	1,240,000 ↑ 290,000
KPIT Technologies Ltd (Technology) Equity, Since 31 Jan 19 \| 542651	4%	₹20 Cr	1,665,000 ↑ 540,000
Tata Elxsi Ltd (Technology) Equity, Since 31 May 20 \| 500408	3%	₹16 Cr	124,000 ↑ 38,000
Tech Mahindra Ltd (Technology) Equity, Since 30 Apr 16 \| 532755	3%	₹14 Cr	173,000

2. ICICI Prudential Technology Fund

To generate long-term capital appreciation for you from a portfolio made up predominantly of equity and equity-related securities of technology intensive companies.

ICICI Prudential Technology Fund is a Equity - Sectoral fund was launched on 3 Mar 00. It is a fund with High risk and has given a CAGR/Annualized return of 10.9% since its launch. Ranked 37 in Sectoral category. Return for 2019 was 2.3% , 2018 was 19.1% and 2017 was 19.8% .

Below is the key information for ICICI Prudential Technology Fund

ICICI Prudential Technology Fund Growth
Launch Date	3 Mar 00
NAV (19 Oct 20)	₹84.13 ↓ -0.31 (-0.37 %)
Net Assets (Cr)	₹692 on 30 Sep 20
Category	Equity - Sectoral
AMC	ICICI Prudential Asset Management Company Limited
Rating	☆☆
Risk	High
Expense Ratio	2.6
Sharpe Ratio	0.91
Information Ratio	-0.35
Alpha Ratio	4.24
Min Investment	5,000
Min SIP Investment	100
Exit Load	0-1 Years (1%),1 Years and above(NIL)

Growth of 10,000 investment over the years.

Date	Value
30 Sep 15	₹10,000
30 Sep 16	₹8,933
30 Sep 17	₹9,486
30 Sep 18	₹14,364
30 Sep 19	₹13,890
30 Sep 20	₹18,896

ICICI Prudential Technology Fund SIP Returns

Total investment amount is ₹300,000
expected amount after 5 Years is ₹436,710.
Net Profit of ₹136,710 Invest Now

Returns for ICICI Prudential Technology Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20

Duration	Returns
1 Month	3.8%
3 Month	33%
6 Month	80.7%
1 Year	43.5%
3 Year	26%
5 Year	14.8%
10 Year
15 Year
Since launch	10.9%

Historical performance (Yearly) on absolute basis

Year	Returns
2019	2.3%
2018	19.1%
2017	19.8%
2016	-4%
2015	3.9%
2014	26.3%
2013	62.6%
2012	17.1%
2011	-18.9%
2010	44.5%

Fund Manager information for ICICI Prudential Technology Fund

Name	Since	Tenure
Sankaran Naren	14 Jul 17	3.22 Yr.
Priyanka Khandelwal	8 Jul 20	0.23 Yr.
Vaibhav Dusad	2 May 20	0.41 Yr.

Data below for ICICI Prudential Technology Fund as on 30 Sep 20

Equity Sector Allocation

Sector	Value
Technology	69.59%
Communication Services	18.45%
Industrials	4.9%
Consumer Defensive	0.85%

Asset Allocation

Asset Class	Value
Cash	6.21%
Equity	93.79%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Infosys Ltd (Technology) Equity, Since 30 Apr 08 \| INFY	27%	₹149 Cr	1,609,724 ↓ -200,000
Bharti Airtel Ltd (Communication Services) Equity, Since 31 May 20 \| BHARTIARTL	10%	₹53 Cr	1,036,840 ↑ 515,576
Tata Consultancy Services Ltd (Technology) Equity, Since 30 Sep 19 \| TCS	7%	₹36 Cr	158,185 ↑ 85,000
IndiaMART InterMESH Ltd (Communication Services) Equity, Since 30 Jun 20 \| 542726	6%	₹32 Cr	86,256
Tech Mahindra Ltd (Technology) Equity, Since 31 Oct 16 \| 532755	5%	₹26 Cr	356,099 ↑ 183,973
Hexaware Technologies Ltd (Technology) Equity, Since 31 May 20 \| 532129	5%	₹25 Cr	623,965 ↓ -50,000
Wipro Ltd (Technology) Equity, Since 30 Sep 19 \| 507685	4%	₹22 Cr	806,936 ↑ 130,000
Larsen & Toubro Infotech Ltd (Technology) Equity, Since 31 Jul 16 \| 540005	4%	₹22 Cr	88,788 ↓ -7,630
Info Edge (India) Ltd (Communication Services) Equity, Since 31 Aug 20 \| NAUKRI	3%	₹16 Cr	48,545 ↑ 48,545
TeamLease Services Ltd (Industrials) Equity, Since 31 May 20 \| TEAMLEASE	3%	₹15 Cr	64,340

3. Franklin India Feeder - Franklin U S Opportunities Fund

The Fund seeks to provide capital appreciation by investing predominantly in units of Franklin U. S. Opportunities Fund, an overseas Franklin Templeton mutual fund, which primarily invests in securities in the United States of America.

Franklin India Feeder - Franklin U S Opportunities Fund is a Equity - Global fund was launched on 6 Feb 12. It is a fund with High risk and has given a CAGR/Annualized return of 19.7% since its launch. Ranked 6 in Global category. Return for 2019 was 34.2% , 2018 was 6.5% and 2017 was 18.1% .

Below is the key information for Franklin India Feeder - Franklin U S Opportunities Fund

Franklin India Feeder - Franklin U S Opportunities Fund Growth
Launch Date	6 Feb 12
NAV (16 Oct 20)	₹47.6283 ↓ -0.14 (-0.30 %)
Net Assets (Cr)	₹2,252 on 30 Sep 20
Category	Equity - Global
AMC	Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Rating	☆☆☆☆
Risk	High
Expense Ratio	1.56
Sharpe Ratio	1.61
Information Ratio	0.1
Alpha Ratio	3.64
Min Investment	5,000
Min SIP Investment	500
Exit Load	0-3 Years (1%),3 Years and above(NIL)

Growth of 10,000 investment over the years.

Date	Value
30 Sep 15	₹10,000
30 Sep 16	₹10,530
30 Sep 17	₹12,077
30 Sep 18	₹16,537
30 Sep 19	₹16,178
30 Sep 20	₹23,415

Franklin India Feeder - Franklin U S Opportunities Fund SIP Returns

Total investment amount is ₹300,000
expected amount after 5 Years is ₹481,656.
Net Profit of ₹181,656 Invest Now

Returns for Franklin India Feeder - Franklin U S Opportunities Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20

Duration	Returns
1 Month	6%
3 Month	9.9%
6 Month	33%
1 Year	48.1%
3 Year	25.8%
5 Year	18.6%
10 Year
15 Year
Since launch	19.7%

Historical performance (Yearly) on absolute basis

Year	Returns
2019	34.2%
2018	6.5%
2017	18.1%
2016	-0.8%
2015	8.8%
2014	8.4%
2013	55.2%
2012
2011
2010

Fund Manager information for Franklin India Feeder - Franklin U S Opportunities Fund

Name	Since	Tenure
Mayank Bukrediwala	24 Aug 20	0.1 Yr.

Data below for Franklin India Feeder - Franklin U S Opportunities Fund as on 30 Sep 20

Equity Sector Allocation

Sector	Value
Technology	27.56%
Health Care	16.4%
Financial Services	14.27%
Consumer Cyclical	13.14%
Communication Services	7.96%
Industrials	5.83%
Real Estate	5.79%
Consumer Defensive	2.2%
Basic Materials	1.21%

Asset Allocation

Asset Class	Value
Cash	1.75%
Equity	94.72%
Other	3.52%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Franklin US Opportunities I(acc)USD Investment Fund \| -	100%	₹2,253 Cr	4,631,642 ↑ 111,337
Call, Cash & Other Assets CBLO \| -	0%	-₹1 Cr

4. Aditya Birla Sun Life Digital India Fund

(Erstwhile Aditya Birla Sun Life New Millennium Fund)

A multi-sector open-ended growth scheme with the objective of long term growth of capital, through a portfolio with a target allocation of 100% equity, focusing on investing in technology and technology dependent companies, hardware, peripherals and components, software, telecom, media, internet and e-commerce and other technology enabled companies. The secondary objective is income generation and distribution of dividend.

Aditya Birla Sun Life Digital India Fund is a Equity - Sectoral fund was launched on 15 Jan 00. It is a fund with High risk and has given a CAGR/Annualized return of 10.2% since its launch. Ranked 33 in Sectoral category. Return for 2019 was 9.6% , 2018 was 15.6% and 2017 was 22.4% .

Below is the key information for Aditya Birla Sun Life Digital India Fund

Aditya Birla Sun Life Digital India Fund Growth
Launch Date	15 Jan 00
NAV (19 Oct 20)	₹74.83 ↑ 0.01 (0.01 %)
Net Assets (Cr)	₹611 on 30 Sep 20
Category	Equity - Sectoral
AMC	Birla Sun Life Asset Management Co Ltd
Rating	☆☆
Risk	High
Expense Ratio	2.75
Sharpe Ratio	0.86
Information Ratio	0.58
Alpha Ratio	6.16
Min Investment	1,000
Min SIP Investment	1,000
Exit Load	0-365 Days (1%),365 Days and above(NIL)

Growth of 10,000 investment over the years.

Date	Value
30 Sep 15	₹10,000
30 Sep 16	₹9,468
30 Sep 17	₹10,191
30 Sep 18	₹14,730
30 Sep 19	₹15,096
30 Sep 20	₹19,839

Aditya Birla Sun Life Digital India Fund SIP Returns

Total investment amount is ₹300,000
expected amount after 5 Years is ₹447,579.
Net Profit of ₹147,579 Invest Now

Returns for Aditya Birla Sun Life Digital India Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20

Duration	Returns
1 Month	5.1%
3 Month	26.9%
6 Month	62.4%
1 Year	37.4%
3 Year	25.3%
5 Year	16%
10 Year
15 Year
Since launch	10.2%

Historical performance (Yearly) on absolute basis

Year	Returns
2019	9.6%
2018	15.6%
2017	22.4%
2016	-3.5%
2015	11.2%
2014	21.1%
2013	50.2%
2012	3.7%
2011	-21.8%
2010	16.6%

Fund Manager information for Aditya Birla Sun Life Digital India Fund

Name	Since	Tenure
Kunal Sangoi	15 Jan 14	6.71 Yr.

Data below for Aditya Birla Sun Life Digital India Fund as on 30 Sep 20

Equity Sector Allocation

Sector	Value
Technology	74.05%
Communication Services	13.47%
Industrials	9.62%

Asset Allocation

Asset Class	Value
Cash	2.85%
Equity	97.14%
Other	0.01%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Infosys Ltd (Technology) Equity, Since 30 Apr 05 \| INFY	24%	₹148 Cr	1,470,909
Tech Mahindra Ltd (Technology) Equity, Since 31 May 13 \| 532755	8%	₹50 Cr	634,366 ↓ -69,252
Bharti Airtel Ltd (Communication Services) Equity, Since 31 Aug 19 \| BHARTIARTL	6%	₹38 Cr	907,923 ↓ -223,163
Tata Consultancy Services Ltd (Technology) Equity, Since 30 Apr 05 \| TCS	6%	₹36 Cr	143,183 ↑ 49,480
HCL Technologies Ltd (Technology) Equity, Since 31 Dec 10 \| HCLTECH	5%	₹31 Cr	387,067 ↓ -137,199
Majesco Ltd (Technology) Equity, Since 31 Jan 18 \| 539289	5%	₹30 Cr	364,392 ↓ -93,059
Cyient Ltd (Industrials) Equity, Since 31 May 14 \| CYIENT	5%	₹30 Cr	769,609
Honeywell Automation India Ltd (Industrials) Equity, Since 30 Jun 18 \| 517174	4%	₹27 Cr	8,159
Apple Inc (Technology) Equity, Since 30 Nov 18 \| AAPL	3%	₹21 Cr	25,144
Persistent Systems Ltd (Technology) Equity, Since 31 Jul 13 \| PERSISTENT	3%	₹20 Cr	147,331 ↓ -7,790

5. SBI Technology Opportunities Fund

(Erstwhile SBI IT Fund)

To provide the investors maximum growth opportunity through equity investments in stocks of growth oriented sectors of the economy.

SBI Technology Opportunities Fund is a Equity - Sectoral fund was launched on 9 Jan 13. It is a fund with High risk and has given a CAGR/Annualized return of 18.5% since its launch. Ranked 42 in Sectoral category. Return for 2019 was 12.2% , 2018 was 17.1% and 2017 was 13% .

Below is the key information for SBI Technology Opportunities Fund

SBI Technology Opportunities Fund Growth
Launch Date	9 Jan 13
NAV (19 Oct 20)	₹86.0349 ↓ -0.18 (-0.21 %)
Net Assets (Cr)	₹273 on 30 Sep 20
Category	Equity - Sectoral
AMC	SBI Funds Management Private Limited
Rating	☆
Risk	High
Expense Ratio	3.02
Sharpe Ratio	0.73
Information Ratio	0.37
Alpha Ratio	1.21
Min Investment	5,000
Min SIP Investment	500
Exit Load	0-15 Days (0.5%),15 Days and above(NIL)

Growth of 10,000 investment over the years.

Date	Value
30 Sep 15	₹10,000
30 Sep 16	₹9,527
30 Sep 17	₹9,563
30 Sep 18	₹13,714
30 Sep 19	₹14,174
30 Sep 20	₹17,462

SBI Technology Opportunities Fund SIP Returns

Total investment amount is ₹300,000
expected amount after 5 Years is ₹426,080.
Net Profit of ₹126,080 Invest Now

Returns for SBI Technology Opportunities Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 19 Oct 20

Duration	Returns
1 Month	5.6%
3 Month	20%
6 Month	49.1%
1 Year	30.5%
3 Year	23.1%
5 Year	13%
10 Year
15 Year
Since launch	18.5%

Historical performance (Yearly) on absolute basis

Year	Returns
2019	12.2%
2018	17.1%
2017	13%
2016	-3.3%
2015	2.4%
2014	29.2%
2013
2012
2011
2010

Fund Manager information for SBI Technology Opportunities Fund

Name	Since	Tenure
Anup Upadhyay	1 Jun 11	9.34 Yr.

Data below for SBI Technology Opportunities Fund as on 30 Sep 20

Equity Sector Allocation

Sector	Value
Technology	74.56%
Communication Services	14.95%
Consumer Defensive	2.68%
Financial Services	1.46%
Industrials	1.2%

Asset Allocation

Asset Class	Value
Cash	5.15%
Equity	94.85%

Top Securities Holdings / Portfolio

Name	Holding	Value	Quantity
Infosys Ltd (Technology) Equity, Since 31 Jan 03 \| INFY	21%	₹59 Cr	581,800 ↑ 35,000
Tata Consultancy Services Ltd (Technology) Equity, Since 30 Apr 06 \| TCS	18%	₹48 Cr	193,764
Tech Mahindra Ltd (Technology) Equity, Since 31 Aug 15 \| 532755	10%	₹27 Cr	336,135 ↑ 41,700
HCL Technologies Ltd (Technology) Equity, Since 31 Mar 06 \| HCLTECH	9%	₹26 Cr	318,174 ↑ 13,200
Bharti Airtel Ltd (Communication Services) Equity, Since 31 May 18 \| BHARTIARTL	7%	₹20 Cr	483,630 ↑ 73,000
Alphabet Inc A (Communication Services) Equity, Since 30 Sep 18 \| GOOGL	5%	₹14 Cr	1,255 ↓ -170
Persistent Systems Ltd (Technology) Equity, Since 31 Aug 20 \| PERSISTENT	3%	₹9 Cr	67,500
MindTree Ltd (Technology) Equity, Since 30 Sep 20 \| 532819	3%	₹8 Cr	61,900 ↑ 61,900
NIIT Ltd (Consumer Defensive) Equity, Since 31 Mar 19 \| 500304	3%	₹7 Cr	549,946
Oracle Financial Services Software Ltd (Technology) Equity, Since 31 Aug 20 \| 532466	3%	₹7 Cr	23,700 ↑ 9,700

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.