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What Does Rolling Returns in ULIP Fund Performance Indicate?

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August 03, 2021

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Investing is a huge deal for most people. We pour our hard-earned money into various funds to grow our wealth and secure our futures. One investment tool available to us is Unit-Linked Insurance Plans (ULIPs). A ULIP plan offers investment opportunities while providing the policyholder with life cover. As with any investment, you must keep an eye on your ULIP fund performance.

Looking at Your ULIP Fund Performance

Your insurance provider or investment advisor will provide you with timely updates about the performance of your ULIP policy. Pay careful attention to what your advisor shows you. There are two indicators of fund performance. The first is trailing or point-to-point returns. These figures will tell you how a fund has performed over a specific period. For example, it might tell you that the value of your fund has grown by INR 100 from 1 January 2021 to 31 March 2021.

The second indicator is rolling returns. These figures showcase the performance of your ULIP investment over multiple time blocks. The numbers will tell you how your funds have been doing across time. Many believe that rolling returns offer a more holistic view of your ULIP’s performance.

Gauging Your Actual Fund Performance

To better understand the performance of your ULIP investment, you should always ask to look at rolling returns. People believe that these figures are more accurate since they overcome the point-to-point return bias. With rolling returns, you can view the performance of a given fund in overlapping cycles. So, you could ask to see three-year rolling returns with daily shifts over ten years. You will then receive information regarding how the fund has performed for various three-year periods over the past ten years by shifting a day at a time. So, instead of looking at a single three-year trailing return, you get a better overview of the fund performance. You can opt to look at three-, five- or ten-year rolling returns and choose daily, weekly, or monthly frequencies. Once you have a look at the figures, you can check how often the selected fund has outperformed the benchmark index over the selected period.

ULIP Fund Performance

Most people opt to invest in a ULIP plan since it offers complete control over the investment while also providing the investor with life cover. Depending on your risk appetite, future goals and financial standing, you can decide where to invest your funds. By picking the right balance of exposure to equity and debt funds, you can grow your wealth over time. For your fund to perform well, you need to pick the right mix of market instruments.

You can speak to your investment advisor about your goals and find the right balance for you. Typically, younger individuals can invest more in equity funds that offer high returns but prove risky. Older investors who cannot afford to take risks should opt for debt-heavy investment plans. Once you make the initial investment, you must check the fund performance and make corrections whenever necessary. You can move funds to equity instruments when the market is performing well. Alternatively, you could opt for more debt funds to stabilise returns when the market dips.

What Is the Key to Success for a ULIP Investment?

Once you have purchased a ULIP insurance and investment plan, patience is key. You must remain invested for as long as possible to enjoy higher returns on your investment. Make sure you consult with a trusted fund manager before selecting your investment fund mix. Whenever the market is underperforming, stick to your guns and wait it out. If you make a rash decision and surrender your policy, you will end up harming your returns. Evaluate your fund performance regularly and make corrections or changes whenever necessary. Always ask to look at the rolling returns as part of your evaluation process. Doing this will help you make prudent choices for a financially safe and secure future.

While building your financial strategy, you must consider the advantages of purchasing a ULIP investment plan. These policies offer more than just life cover. They also allow you to grow your wealth so you can meet your future goals.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Vishal Subharwal Vishal Subharwal

Vishal Subharwal heads the Strategy, Marketing, E-Commerce, Digital Business & Sustainability initiatives at HDFC Life. He is responsible for crafting and ensuring successful implementation of the overall organisation strategy.

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