DSP Merrill Lynch Super SIP is an innovative systematic investment plan (SIP) launched by DSP ML Mutual Fund. To begin with, it's not a new fund offer as a lot of investors believe. Rather, the fund house has added an innovative feature wherein investments in the fund's existing SIPs have been made available with an insurance element. For the investor, this is clearly an investment meets insurance value proposition.

To put it plainly, the Super SIP envisages SIP investments in DSP ML's existing equity-oriented funds, five of them 

• DSP ML Equity (equity  diversified)
   

• DSP ML Opportunities (equity  diversified)
   

• DSP ML Top 100 (equity diversified)
   

• DSP ML T.I.G.E.R. (equity  basic industries)
   

• DSP ML Balanced (balanced)

 

While SIPs in these funds have always been on offer, with the Super SIP it's a little different. There is an insurance element associated with the SIPs. The Super SIP has two plans:

Option	Tenure (years)	Insurance cover	Liquidity
Variable Cover	6	Sum of remaining SIPs X number of months from date of death until end of tenure	Can be redeemed any time subject to applicable exit load
	11
	16
Fixed Cover	21	240 times monthly instalment	Can be redeemed after 3 years from date of first SIP for an amount less than or equal to the capital appreciation as on date of redemption.

So should you opt for the Super SIP? We believe there are some points that investors need to note before firming up their investment plans.

Positives:

1. There can be little debate on the fact that mutual fund investing is for the long-term. A 6/11/16-Yr SIP helps you do just that. It instills discipline and focus in investing, which are important traits of the successful investor.
    

2. The insurance sweetener has utility. Though it's not a replacement for an insurance/protection plan, as far as investors are concerned their survivors can get considerable money in case of an eventuality. Also noteworthy from the investor's perspective is that the monies received as insurance in case of an eventuality is tax-free.
    

3. SIPs allow you to benefit from rupee-cost averaging. Lumpsum investments are strictly for investors who understand equities well enough to time their entry in stock markets. Since this is an elusive art, individuals are better off investing at regular intervals over a long period of time so as to get a good average. This is what rupee-cost averaging is all about, and the Super SIP given its long tenures is an ideal avenue to help investors make the most of it.
    

4. The Super SIP allows investors to switch freely between the five funds. Informed investors can use this flexibility to great advantage. Investors who are not comfortable with equity markets ruling at high levels can switch to DSP ML Balanced Fund. Likewise, investors who believe that the capital goods sector offers great potential can switch to DSP ML T.I.G.E.R. Fund. Investors who are biased towards large caps can switch to DSP ML Top 100 Fund.
    

5. The Fixed Cover option will be of particular interest to investors. As opposed to the Variable Cover option, which only remits the unpaid SIPs in case of an eventuality, the Fixed Cover actually offers an insurance cover 240 times the monthly installment. For instance, if the investor has a monthly SIP of Rs 10,000, his insurance cover is Rs 2,400,000 (Rs 24 lakhs). Going forward, should the investor wish to enhance his insurance cover, he can increase the SIP amount. For instance, if he increases the SIP amount to Rs 20,000, his revised insurance cover will be Rs 4,800,000 for that period.

Negatives:

1. While the merits of long-term investing need no elaboration, to be associated with a single AMC (asset management company) over such a long tenure (minimum 6 years) can prove to be risky. Of course, you can exit the Super SIP but you lose the insurance benefits.
    

2. On the same lines, it is impracticable to give a 21-Yr or even a 6-Yr view on a single fund at a point in time. At Personalfn, we track mutual fund schemes very closely. Funds make it to our list of recommended mutual fund schemes only after passing the most stringent test of scrutiny time after time. A fund that makes it to the list the first time cannot take its place for granted because there is review done periodically. So while some of DSP ML's funds have performed well over the years, we are unable to comment on whether this performance will hold good for the next 6-Yrs for instance. For instance, if there is a critical change in the fund management team or if the fund house is taken over; it would call for a review of DSP ML's funds given that these are fundamental changes that impact performance.
    

We believe that investors should consider the negatives and positives that we have outlined well before investing in the DSP ML Super SIP. Consider your risk profile and see how DSP ML's five existing funds in the Super SIP can help you create wealth over the long-term. There is little doubt that the Super SIP is a good idea; but it would have worked better if several AMCs had joined hands to offer an innovative scheme like the Super SIP. In that case, investors would have the option to switch across AMCs, which is a flexibility investors should look for if they are looking to commit monies for periods as long as 6/11/16/21 years.
 

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