NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Mutual Funds
Mr. Kapoor, aged 35, has a high risk appetite, a 15-year horizon and wishes to invest regularly each month in equity funds to smooth out purchase cost. Which approach best suits his stated aim?
A Systematic Investment Plan in an equity scheme suits him, because fixed monthly investments buy more units when prices are low and fewer when high, averaging cost over a long horizon and matching his high risk appetite.
- AA lump sum invested at one time in a liquid fund
- BA Systematic Withdrawal Plan from a debt fund
- CA Systematic Investment Plan in an equity schemeCorrect
- DA Systematic Transfer Plan from equity into a liquid fund
Explanation
Regular monthly investment in equity averages the purchase cost over market cycles (rupee cost averaging). A liquid-fund lump sum and an SWP do not build equity exposure, and an STP from equity to liquid reduces equity exposure.
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