how CAGR is calculated in MF SIP?

POSTED BY alpesh pancholi ON March 7, 2012 6:44 pm COMMENTS (11)

i am investing in mfs in sip of 10k in different schemes.
one of them is hdfc equity…1k every month since 06-2009.
now my consolidated statement of holding of units show only 3% CAGR.
i read on valueresearch that hdfc equity 3yr return is 37%.
so why there is difference? am i missing something or mis-calculating?

11 replies on this article “how CAGR is calculated in MF SIP?”

  1. alpesh pancholi says:

    @ashal
    dear ashal
    thanx
    i saw it on the link u gave..
    it shows 4.22% sip return to date…
    thanx for the useful link..

  2. Anand says:

    Just use the excel sheet and use XIRR formula.

  3. Sachin says:

    Try adding your details in Moneycontrol portfolio and you can get exact CAGR.

  4. BanyanFA says:

    Alpesh,
    Fund houses are required to show their returns over 1 year as CAGR. Returns within 1 year are absolute returns. I am not sure how have you arrived at a CAGR at 3%. If you invested 1K per mont from 1 Jan 2006 to 31 Dec 2009, your situation should be something like this :

    Scheme: HDFC Equity Fund – Gr
    Monthly Investment: Rs. 1,000.00
    Tenure (Months): 31
    Total Investment: Rs. 31,000.00
    Current Value: (as on 07-Mar-2012) Rs. 52,538.21
    Total Units Purchased: 204.5562
    Return on Investment: 15.73%

    1. ainvest says:

      from 1 Jan 2006 to 31 Dec 2009 it makes 48 months and not 31 months and for this period

      Annualised SIP Return over period is : 23.75%

      Non-SIP return(annualised) over period: 21.21%

      1. Dear Ainvest, please read the basic query again. The start month of SIP is June 2009 & till date the SIP is on. The same fact is clear from the last reply of dear Alpesh.

        Thanks

        Ashal

  5. Alpesh – Can you tell me your SIP start date and the total units you hold as on today?

  6. bharat shah says:

    and i think, it shows the fallacy of sip in isolation. it is o.k. as far as you have regular stream of income to invest with discipline , but if you have a lump sum a/m to invest, you have to take a call whether to invest at one go, or through sip in short span or longer span, on the condition of the market, whether it is depressed, normal or overheated. of course the most important principle for investing in equity or equity related products (read equity mf) is for long term more tan 5-7 yrs.

  7. TheZionView says:

    What you are seeing in the Value research website is for Lumpsum not for SIP in HDFC Equity. That is if you have invested all the money on 06-2009 ,then your CAGR will be 37%.

    But since your were a SIP and you bought though ups and downs of the market your return is in 3%.

    Dont think this as failing of SIP. Just imagine instead of 06-2009 you invested lumpsum on 06-2007 you would have been sitting in loss or 1-2% profit even after 5 years. This is the reason SIP works.

    1. rmohan80@gmail.com says:

      @thezionview:

      Does that mean the my conservative estimate of 12.5% CAGR for mutual fund investments on a SIP over long term (15+ years) may not necessarily happen since the difference is huge in lumpsum vs SIP (37% vs 3%)

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