Are Lump Sum Investments Riskier than Systematic Investment Plans? Some Empirical Evidence

Abstract

The asset management industry has marketed for years this idea of "disciplined investing" through Systematic Investment Plans (SIPs). Hence now there are numerous myths associated with SIPs. One of these myths is that a SIP is a successful prudent investment strategy that reduces risk avoiding market timing. But this idea has many opponents, that strongly support the concept of Lump Sum Investments (LSIs). The aim of this short paper is to compare SIPs and LSIs, focusing on the downside risk (without forgetting profitability) of these two popular strategies.

Keywords: Investment strategies, Systematic Investment Plan, downside risk, block-bootstrap

JEL Classification: G11, G10, D31, G00