Power 1. Diversify across Process - Value, Momentum, Quality & Size ensures the benefits of right diversification.
One of the biggest advantages of investing in mutual funds is diversification. Diversification reduces risk. Investing in a fund enables you to invest in multiple stocks - this is one level of diversification. However this is not adequate. Outperformance of a fund is due to a Process-method of selection of stocks with similar characteristics. A fund manager tends to have a natural inclination/expertise for a particular Process. Every Process works well in a certain market situation but not in others.
When you do a monthly SIP over a long period of time you need to diversify across these Processes. This ensures you have the right diversification in your portfolio-so at least one fund is working well helping you to stay invested which is critical for success in investing. Over longer term, 10-15 years, all of the above processes beat the market. Hence, it is prudent to invest in all the key processes and hold them for over 10-15 years without worrying about a certain process going out of fashion for short term. So with SmartSIP you get the Power of Diversification across Process.