How Does SIP Work?
A systematic investment plan is typically a monthly investment but it can also be weekly, monthly or quarterly in nature investments can be made at various intervals according to your preference. In order to set up an SIP, you fill up an SIP form and a bank mandate. With online platforms like Paisabazaar, you can do both these steps online in a matter of minutes through your Aadhar, Debit Card or Net Banking.
The amount deducted is then invested in the mutual fund scheme of your choice according to the applicable NAV.
For example, let’s say you set up a Rs. 1,000 monthly SIP plan for 12 months starting from the 7th of the month. Every month around the same date, your bank account will show a Rs. 1000 deduction towards investment in the mutual fund of your choice. The case of applicable NAV is based on whether the 7th is a day when the markets are open or closed. If the 7th is a working day for the stock market, the applicable NAV for your SIP installment would be the chosen mutual fund’s NAV at the close of markets on the 7th. If 7th is a holiday such as a Saturday, Sunday or Public Holiday, then the applicable NAV would be the one obtained at the end of the next working day.
How to Select the Best SIP Plan for Your Investment Goals:
While choosing an SIP, you want your money to grow at the fastest possible rate, while also being less susceptible to common mutual fund investment risks such as volatility and low liquidity. This is not an easy combination to come create. However, in the following sections, we will discuss some leading equity mutual funds that would be ideal from the point of view of equity investments. Moreover, quite a few of these funds in the following sections are actually tax-saver ELSS mutual funds; hence they are capable of providing a dual benefit.
Choose Best Mutual Funds to Invest via SIP Plans
The following is a short list of equity mutual funds that provide the best option for individuals seeking to invest in high ROI schemes via the SIP Plans route. The key criteria used to pick these funds from the wide range of available investment options were as follows:
- All these funds have shown exceptional performance over the past 3 to 5 years.
- CRISIL Rated funds of Ranks 1 and 2 have been placed towards the top of the list.
- High rating of 4 or above was obtained by all of these funds from Value Research Online.
Additionally, this list also features inputs from Paisabazaar.com’s in-house experts who have extensive experience in selecting the best investments depending upon the changing conditions of India’s securities market.
Best SIP Investments in 2018-19*:
|Fund Name||1 Year Returns||3 Year Returns||5 Year Returns|
|ICICI Prudential Bluechip Fund||-1.29%||15.86%||16.06%|
|DSP Tax Saver||-7.76%||14.87%||18.61%|
|Franklin India Equity Fund||-4.85%||13.08%||18.13%|
|ICICI Prudential Value Discovery Fund||-5.23%||11.32%||19.82%|
|Axis Long Term Equity Fund||-1.51%||13.89%||20.73%|
|Reliance Tax Saver (ELSS) Fund||-21.47%||10.42%||18.40%|
|DSP Equity Opportunities Fund||-9.50%||15.25%||17.87%|
|Motilal Oswal Long Term Equity Fund||-9.64%||16.65%||_|
|Aditya Birla Sun Life Pure Value Fund||-25.38%||12.09%||23.43%|
|HDFC Equity Fund||-4.55%||17.26%||17.39%|
*3 year/5 year returns are annualised. Direct – Growth Options of Funds considered. Data based on NAV of direct growth variant of schemes as on 17th January 2019.
ICICI Prudential Focused Bluechip Equity Fund
The strategy of this fund is to primarily invest in the 20 leading companies in the top 200 companies (according to market capitalization) listed on the National Stock Exchange, Mumbai. However, after crossing the Rs. 1,000 crores mark, the fund has started investing in companies outside the original top 200 list. As of now, a majority of the fund’s investments i.e. around 95% is in large cap stocks, which ensures stability and consistency for those seeking long term capital appreciation. With a track record of consistently outperforming its peers, the ICICI Prudential Focused Bluechip Equity Fund definitely offers a top rated SIP plan for those seeking systematic investments in an equity mutual fund.
DSP BlackRock Tax Saver
SIP plans can truly be your best friend if you are looking for tax saving investments that do not stress your finances in the final quarter of the financial year. One of our top recommendations in the ELSS category for SIP plan is the DSP BlackRock Tax Saver Fund. This tax saving mutual fund scheme is focused on generating a capital appreciation of investments in the medium to long term through a diverse range of investments. The major investment areas in the purview of this scheme are equities and various equity derivatives. In terms of its track record, the DSP BlackRock Tax Saver Fund was launched in January 2007 by DSP Blackrock Fund and has consistently outperformed its benchmark as well as most of its peers in both the 3 year and 5 year ROI categories.
Franklin India Prima Plus Fund
ICICI Prudential Value Discovery Fund
In case you are looking for SIP plans that invest in an equity fund focused on making value stock investments, you need to look no further as the ICICI Prudential Value Discovery Fund fits the bill perfectly. The opinion of what exactly are “value stocks” may vary from one expert to another, however, these stocks do share a few common traits. These stocks are expected to have great future growth potential while being reasonably valued in the current market conditions. Alternately, these stocks feature attractive low valuations with respect to their book value, earnings or future/current dividends. The strategy has worked out quite well for this ICICI Prudential AMC fund as it has consistently maintained a high rating since its launch way back in 2004. Originally the fund was quite heavily invested in mid-cap stocks, which made it seem like a risky investment to risk-averse investors, but in recent times, its large cap exposure has grown to be as high as 80%, which signals an increase in the possibility of consistent future returns in the long term.
Axis Long Term Equity Fund
The Axis Long Term Equity Fund has been one of the most favoured SIP plans for investors seeking consistent returns on their tax saving investments. The mutual fund is focused on generating consistent ROI in the long term through a portfolio comprising high-quality equity stocks and equity derivatives. The exceptional performance of this mutual fund is best illustrated by the fact that the Axis Long Term Equity Fund has managed to provide consistently high returns to its investors outperforming its benchmark as well as its peers since its launch over a decade back. With returns computed at over 17% and in excess of 23% over the 3-year and 5-year periods, this premier tax saving ELSS fund offering has been a preferred investment choice for Indian mutual fund investors from various walks of life.
Reliance Tax Saver (ELSS) Fund
DSP BlackRock Opportunities Fund
The primary objective of the DSP BlackRock Opportunities Fund is to provide capital appreciation to its investor while the secondary objective is to generate income as well as ensure dividend distribution. The focus of this leading equity mutual fund has been to invest in top-rated equities as well as equity-linked investments in order to achieve its stated objectives. Moreover, in order to distinguish itself from its peers, the fund has historically maintained a highly diversified portfolio of investments, which has helped achieve its aim to consistently and significantly outperform competing equity funds. With 3 year and 5-year returns provided by DSP BlackRock Opportunities Fund currently computed at over 19% and over 23% respectively, this equity investment is one of most suitable for investors seeking a high performing SIP Plan investment to meet their long-term investment goals.
Motilal Oswal Long Term Equity Fund
The Motilal Oswal Long Term Equity Fund is an ELSS tax saver scheme from the renowned fund house that is well known as a specialist in equities investing. In case you have a long term horizon and are looking for the top mutual funds for SIP, this diversified equity offering might just fit the bill. Though relatively new in the space, this scheme has shown significant out performance since launch even though its relatively small AUM value of Rs. 852 crores (as on 28th Feb 2018) raises the possibility of short term volatility. Being a tax saver mutual fund investment the primary investments of this scheme are in equities and equity derivative without any sector or market-cap bias. As per returns portfolio records close to 70% of the scheme’s assets are invested in large cap equities while mid cap equities account for almost all of the remainder of this scheme’s portfolio. In case you have a high risk tolerance and are in for the long haul, this ELSS from Motilal Oswal MF AMC is definitely a potentially high return online SIP investment.
Aditya Birla Sun Life Pure Value Fund
Aditya Birla Sun Life Pure Value fund is considered one of the best equity funds to invest in simply because of its consistent ability to pick value investments leading to the high probability of long term capital appreciation. In case an investor is seeking the top mutual funds for SIP, this scheme, which favours sector and market cap agnostic equity investments, should definitely make the cut. In recent times, this scheme has appeared slightly mid-cap heavy, but as a result of good stock picks in this potentially high growth segment, it has worked in favour of this mutual fund. Those invested in this scheme can expect significant outperformance during the initial phase of a bull-run along with the proven ability to contain losses during bear phases. All in all definitely one of the best SIP plans for beginners seeking a potentially high performing equity investment option for the long term.
HDFC Equity Fund
HDFC Equity Fund is the flagship equity mutual fund from one of India’s leading fund houses – HDFC Mutual Fund AMC and featured an AUM of Rs. 21,621 crores on 28th Feb 2018. Officially stated objective of this scheme is to provide investors with long term appreciation through investments mainly made into potentially high growth firm that feature solid financials and recognizable competitive advantage. In order to reduce overall volatility, this scheme is invested in multiple industries across multiple market capitalizations along with flexibility to invest in debt/money market investments when required. A closer look at the current portfolio however reveals it to be distinctly overweight in the large cap segment with an allocation of nearly 75% with mid caps accounting for a major portion of the balance. As a result of its consistent performance over the years, this fund is bound to feature as one of top SIP plans that an investor can opt for even if its past performance cannot possibly indicate future performance.
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