Mutual fund investors often wonder if choosing a particular date for their Systematic Investment Plan (SIP) can lead to better returns. While some believe that starting their SIP on the first day of the month is ideal, others think that the middle or end of the month may offer better returns. Some even believe that investing on specific days, like the last Thursday of the month, could be more profitable due to market volatility caused by Futures & Options (F&O) settlements. But is there any truth to these assumptions? Do SIP dates really make a difference in returns?
To answer this question, we conducted a study of SIP returns over a ten-year period from February 1, 2013, to February 1, 2023. We analyzed SIP returns for all dates, ranging from the 1st to the 28th, using Aditya Birla Sun Life Frontline Equity Fund, a large cap scheme, and Nifty 100-TRI, a benchmark that most large cap schemes follow, as examples.
Our analysis revealed that there was no significant difference in SIP returns made on any date of the month. The SIP returns for the scheme ranged between 12.07% to 12.19%, while the benchmark index returned 12.78% to 12.89%. The present value of Rs 10,000 invested monthly in the fund ranged between Rs 22.40 lakh and Rs 22.62 lakh, while the benchmark index returned Rs 23.25 lakh to Rs 23.48 lakh. As such, the returns don’t vary greatly by choosing different dates. Whether you invest at the beginning, middle, or end of the month, the difference is not significant.
| 10-year average monthly SIP returns (%) | |||||||
| Monthly SIP date | 1 | 2 | 3 | 4 | 5 | 6 | 7 |
| Fund SIP XIRR Return (%) | 12.09 | 12.09 | 12.11 | 12.11 | 12.09 | 12.11 | 12.10 |
| Benchmark SIP XIRR Return (%) | 12.79 | 12.79 | 12.81 | 12.80 | 12.79 | 12.81 | 12.81 |
| Monthly SIP date | 8 | 9 | 10 | 11 | 12 | 13 | 14 |
| Fund SIP XIRR Return (%) | 12.09 | 12.07 | 12.08 | 12.11 | 12.13 | 12.11 | 12.12 |
| Benchmark SIP XIRR Return (%) | 12.80 | 12.78 | 12.79 | 12.81 | 12.83 | 12.82 | 12.82 |
| Monthly SIP date | 15 | 16 | 17 | 18 | 19 | 20 | 21 |
| Fund SIP XIRR Return (%) | 12.12 | 12.12 | 12.10 | 12.08 | 12.09 | 12.10 | 12.15 |
| Benchmark SIP XIRR Return (%) | 12.82 | 12.82 | 12.80 | 12.79 | 12.80 | 12.80 | 12.86 |
| Monthly SIP date | 22 | 23 | 24 | 25 | 26 | 27 | 28 |
| Fund SIP XIRR Return (%) | 12.17 | 12.16 | 12.19 | 12.18 | 12.18 | 12.16 | 12.15 |
| Benchmark SIP XIRR Return (%) | 12.87 | 12.86 | 12.89 | 12.88 | 12.88 | 12.87 | 12.86 |
Therefore, investors should focus on choosing the right mutual fund schemes based on their investment goals, horizon, and risk appetite, rather than obsessing over SIP dates. The date of the SIP should be based on convenience and financial discipline. It is best to choose a date based on the day of salary credit to ensure that you save and invest in a disciplined manner. Waiting until the end of the month to spend and invest whatever is left will result in lower savings/investments and a lower corpus.
Moreover, investors should fix their target corpus and the amount needed to achieve their investment goals. Regularly monitoring their portfolio and rebalancing it as necessary can help them achieve their financial objectives.
In conclusion, while choosing the right mutual fund scheme is crucial for achieving one’s investment goals, the date of the SIP is not a significant factor in returns. Therefore, investors should focus on investing in a disciplined manner and regularly monitoring their portfolio to maximize returns.
