Wealth Creation
A lot has been discussed and written about SIP (systematic Investment Plan) in India. Jain Investment has pioneered in SIP 11 years back and been advocating benefits of SIP to all the investors. Some of the benefits highlighted about SIP’s are
  1. Discipline of Investment
  2. Averaging of Asset Class
  3. Power of Compounding
  4. Negating emotions while investing
We have been working hard to take SIP one step forward by identifying trends which can create wealth for investors. Our SIP offering is called JISIP J Curve.
Illustrations I

Broader Equity Market Year 2000 – 2003

This was period where broader equity market was not performing. Stocks, Sectors & markets all were making new lows. INDIA’s GDP growth significantly slowed down. This was the best time to run a J curve in a broader market with diversified equity fund like Franklin India Bluechip.





In last 4 years (2008-20120 we are witnessing a similar trend with global uncertainty, slowdown in growth, high inflation and high interest rates
Illustrations II

Government Securities Year 2006 – 2009

Gilt Funds generate capital gain when interest rate comes down and vice versa. From 2004 till 2006 interest rate on Government Bond has gone up from 5% to 7.5%. There was significant correction in Bond prices in between 2004 to 2006. This was an ideal time to start an SIP in Gilt. We have mentioned below the scenario of an SIP of Rs.100000 started in a Gilt Fund.

Phase I
Interest rate moved from 7.5% to 9.25% in between January 2006 to June 2008. The returns from SIP were muted in this period.



In the above illustration the NAV of the ICICI Prudential GFIP has moved from 10.87 on 1st January, 2006 to 12.78 on 1st July, 2008. The fund has generated a CAGR return of 6.04% during this period.

Phase II
With slowdown in Indian Economy from Lehman crisis inflation came off sharply in India and Interest rate moved down from 9.25% to 5.00% in between July 2008 to January 2009.



In the above illustration the NAV of the ICICI Prudential GFIP has moved from 10.87 on 1st January, 2006 to 18.77 on 1st January, 2009. The fund has generated a CAGR return of 30.30% during this period. An amount of Rs.370000 has grown to Rs.5660400. This is a typical example of a J curve in an asset class.
Illustrations III

Banking Cycle Year 2007 - 2010

The Indian banking sector has been growing at 20% p.a. in the past. It is estimated that in the coming years, India banks are expected to grow at a much faster pace. The banking sector is the direct beneficiary of a growing economy. We have illustrated the returns an SIP of Rs. 25000 in a banking fund.

Phase I
The Sensex moved from 14000 to 8100 in between January 2007 to March 2009. The returns from an SIP in a banking fund were negative during this period.



In the above illustration the NAV of Reliance Banking fund fell from 37.76 on 1st January 2007 to 30.06 on 9th March, 2009. The fund generated a negative return of -32.97%.

Phase II
The Sensex recovered sharply from the 8100 to 21000 in between March 2009 to November 2010.



In the above illustration the NAV of Reliance Banking Fund moved from 37.76 to 126.01. The fund generated a CAGR return of 48.18% during this period. An amount of Rs.1175000 has grown to Rs.2761453. This example undermines the fact that an SIP started at the worst phase of the asset cycle creates significant opportunity when the cycle reverses.