Now, a dollar SIP for Indian investors

 

PineBridge mutual fund has launched Dollar Systematic Investment Plan (SIP). Under this facility an investors will invest a fixed amount of US Dollar through SIP into PineBridge India US Equity Standard fund.
"Suppose you want to accumulate $10,000 for the higher education of your child in the US five years down the line, then dollar SIP will help you plan your investments in terms of dollar as it is difficult for an investor to calculate how much to save in terms of rupees every month to achieve the targeted amount in dollars due to the currency fluctuation" says Siddhartha Singh, CEO, PineBridge mutual fund.
So, how is it different from a normal SIP?
Unlike a normal SIP in which an investor invests a fixed sum in terms of Indian rupees on a fixed date every month, here the investors will be contributing in terms of fixed amount of dollar. The dollar SIP will be converted into rupee and then the rupee amount will be debited from the investor's bank account. Let us explain with an example how it will work.
Suppose, an investor decides to do an SIP of $1 and the exchange rate is Rs 50 to a dollar in the first month, then his SIP amount in terms of INR will be Rs 50. Suppose, in the next month, if rupee depreciates and $1 is equivalent to Rs 55 then he will have to increase the SIP to Rs 55. So, monthly SIP in terms of INR will depend on the exchange rate and will keep on increasing or decreasing accordingly, but will remain constant in dollar terms.
For conversion of dollar into rupee, the RBI reference rate prevailing on the 7 days prior to the transaction day shall be used. For example, if one executes the SIP on 21st of the month then the RBI reference rate of 14th of the month will be used.
The facility is available only in auto debit (ECS) mode and not through post-dated cheques. But one has to submit the application physically as it is not available online.
The investor can mention the maximum authorised debit (MAD) amount per SIP installment in the application form to keep a tab on the amount that can be debited from investor's account. Till the time SIP amount converted from dollar to rupees exceeds the MAD, the SIP amount will not processed and will start automatically as and when the installment amount falls below MAD.
The installment dates available for dollar SIP are 1st/7TH/14TH/21st of the month or quarter. Investor can opt for all the four dates.
The minimum installment amount under dollar SIP is $100 and in multiple sof $1 thereafter. There is no upper limit. The minimum tenure is 12 months.
Returns from a dollar SIP will be the same as a normal SIP.

ANAND MAURYA
PGDM-2SEM