Mutual Funds Strategy – Buy on Dips?

POSTED BY dweep ON May 29, 2011 10:59 pm COMMENTS (2)

Hi,

Just thinking about a new (for me!) mutual fund strategy which can be used instead of SIP:

Everytime – nifty goes down by 1% buy mf units worth rs. 1000.

Invest in mutual fund for long time – 5+ years.

Alternatively, an excel file can be prepared of major holdings of the fund you are interested in. And 1% rule may be applied to sum of change in % of these scripts.

Time: Most  fundhouses/brokerage have cut off time of 1pm/2pm to buy MF at today’s NAV. so can place order before that time.

I think this method can be most useful in midcap funds due to high variation in prices. Also, this can be applied to Gold ETF or any thing you like.

I want to backtest this strategy but too busy. Can anyone help?
Also, pls give your views on it….

2 replies on this article “Mutual Funds Strategy – Buy on Dips?”

  1. Jagadees says:

    @Dweep

    similar to your strategy i came across a variety of sip in fundsindia i.e. VIP(Value-average Investment Plan) – which allows to invest more when market down and less when the market is up. They also done some back testing….. just have a look whether it is useful to u – https://www.fundsindia.com/content/node/vip.do

    Regards
    Jagadees

  2. kora says:

    backtest on what holding period ?

    if it is one day holding period …. it has wee bit bad strategy to follow

    as the next returns are (0.07%) as against the historical drift of about 0.06 % …there are about 494 days like that ….

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