What is a Smart SIP ?
- NORMAL SIP
- In a Normal SIP, an investor invests a fixed amount in a mutual fund scheme at regular intervals
- SMART SIP
- In a Smart SIP, the SIP installment varies based on market valuations
How does a smart SIP work?
Investor decides a SIP Amount : ₹ 10,000
Valuations
CHEAP
More SIP Amount :₹ 20,000
Valuations
NEUTRAL
SIP :₹ 10,000
Valuations
EXPENSIVE
Less SIP Amount :₹ 5,000
You SIP more when the valuations DIP more
Opts for Smart SIP Facility
Decides the Base SIP Installment
The SIP Installment varies based on Valuation
To Gauge Valuation We use BAF Net Equity Allocation Model
Based on Net Equity allocation of BAF Model (%)
Valuation
Smart SIP*
>60
Cheap
20,000 (2x)
40-60
Neutral
Base SIP 10,000 (x)
<40
Expensive
5,000 (0.5x)
Cheap valuation = Base SIP installment is 2x
Neutral valuation = Base SIP installment
Expensive valuation = Base SIP installment is 0.5x
*Investors also have an option to choose the Minimum and Maximum SIP installment. Incase the investor does not indicate the choice of option then the fund will consider it under the Default Smart SIP option.
The above Investment is for illustrative purpose only and should not be construed as a promise on minimum returns and safeguard of capital. KMAMC is not guaranteeing or promising or forecasting any returns. SIP does not guarantee of any profit/loss in declining/upward markets. Actual returns may vary.
How do we decide Valuation ?
BAF Net Equity Allocation (%)
0
20
40
60
80
100
ExpensiveZone
NeutralZone
CheapZone
Smart SIP Installment
PRIMARY FACTOR
Adjusted Trailing P/E
KBAF MODEL
SECONDARY FACTOR
Trend & Sentiment Data
DAILY EQUITY ALLOCATION
FINAL EQUITY ALLOCATION IS ARRIVED AFTER CONSIDERING BOTH FACTORS
20%
Minimum Equity Allocation
100%
Maximum Equity Allocation
This should not be construed as a promise on minimum returns and safeguard of capital. KMAMC is not guaranteeing or promising or forecasting any returns. SIP does not guarantee of any profit/loss in declining/ upward markets. Actual returns may vary. KBAF model is the inhouse model used to determine the net % of equity allocation for Kotak balanced advantage fund
How is it different from Normal SIP ?
Normal SIP
Smart SIP
Source: Internal Research KMAMC. Data Period: 1st Aug 2018 - 29th Sep 2023. For illustration purpose, the above details showcases the scenario of how a Normal SIP and Smart SIP would have worked. We have assumed an SIP amount of Rs. 50,000 and then increase and decrease based on net equity allocation of KBAF. The above Investment is for illustrative purpose only and should not be construed as a promise on minimum returns and safeguard of capital. KMAMC is not guaranteeing or promising or forecasting any returns. SIP does not guarantee of any profit/loss in declining/upward markets. Actual returns may vary.
Benefits of Smart SIP
Aims to take advantage of market movements without hassles
Removes emotion from decision making process
Rupee Cost Averaging + Value Averaging
Features of Smart Facility
Also Available for Systematic Transfer Plan (STP)
SMART SIP
SMART STP
Schemes allowed
All open ended Equity Schemes + Index Fund (Equity) + Kotak Aggressive Hybrid Fund
STP From (Transferor Schemes): All Debt Schemes + Index Fund (Debt) + Kotak Arbitrage Fund + Kotak Debt Hybrid + Kotak Equity Savings Fund.
STP To (Transferee Schemes): All open ended Equity Schemes + Index Fund (Equity) + Kotak Aggressive Hybrid Fund
Frequency
Monthly/Quarterly
Monthly / Quarterly
SIP/STP Date
Any Date i.e. (1st to 30th/31st of a given month) on Monthly/Quarterly option
Any Date i.e. (1st to 30th/31st of a given month) on Monthly/Quarterly option
Other Points
- Smart Facility is applicable only for growth option
- Minimum SIP/STP instalment will be as per scheme SID
- The first Smart SIP/STP instalment will be processed as per the Regular Smart SIP/STP instalment
- If Investor has specified Minimum/ Maximum amount as well as ticked the option for Default Smart SIP, then trigger will be as per the Default Smart SIP/STP Amount
