Best SIP Plans to Invest for 6 Months

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What is a sip? It is a method of investing in mutual funds. If you are planning to invest for a duration of six months then you can start your SIP in debt funds instead of equity. It solves two purposes in an investor’s portfolio – firstly with diversification, it helps in reducing the overall risk. Both new and experienced investors can start a SIP in debt funds. The debt portion offers stability when the equity markets fall.

Secondly, they make a good alternative to your bank savings account. If you want to save the surplus amount let’s say for six months then you can look for SIP plans in low duration funds and ultra-short duration funds. This way you can reach your short term goals like buying a gift, two-wheeler, vacations, etc.  

But before you start your SIP in debt funds you need to be sure of your risk appetite and the investment horizon. Listed below are the two preferred fund categories for six-month SIP investment:

Best Sip Plans for six months in India

Here are some of the best SIP plans that are designed with such a short-term investment perspective:

1. Ultra-short Duration Funds-

They are open-ended debt schemes that are ideal for investors having a short-term goal of three to six months, who can handle market volatilities in order to get higher returns.

Basically, these are debt funds, which invest in fixed-income instruments for a shorter duration of up to six months. They are low-risk funds owing to a shorter span of investments but slightly higher risk than liquid funds. The investment is nearly at a zero risk of loss of the opted duration is more than 3 months. With Ultra-short Duration Funds, you can expect slightly higher or similar returns as your Bank fixed deposits.

Here are some of the best sip plans for ultra-short duration funds:

  1. SBI Magnum Ultra Short Duration Fund: 61% of the investment is in Debt funds out of which Government securities account to 1.6% and 95.01% in very low risk securities.
  2. Kotak Savings Fund:5% of the investment is in Debt funds out of which Government securities account to 6.07% and 92.43% is in very low risk securities.
  3. ICICI Prudential Ultra Short Term Fund: 02% of investment is in Debt out of which 88.21% is invested in very low risk securities.
  4. Aditya Birla Sun life Savings Fund: This fund makes 97.18% of investment in Debt funds, out of which 91.91% is in very low risk securities and 5.26% in Government securities.
Name of the Fund Expense Ratio NAV as on January 2020 (Rs.) Fund Size Trailing Returns 6M Crisil Rank
Aditya Birla Sun life Savings Fund 0.37% 380.5424 15847.47 Cr 3.76
ICICI Prudential Ultra Short Term Fund 9.94% 20.1379 7135.56 Cr  4% 2 stars
Kotak Savings Fund 0.78 31.7503 11278.87 Cr  3.43% 3 Stars
SBI Magnum Ultra Short Duration Fund 0.5% 4399.29 12192.17 Cr.  3.55% 3 Stars

 Disclaimer: “Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.”

(The table doesn’t represent a chronological order and the returns are subject to market risk

2. Low Duration Funds-

If you do not want much risk in your investment and are looking for a short-term investment then you can consider SIP in low duration funds. Their maturity duration is higher than ultra-short term funds and liquid funds. It is suitable for risk-averse investors who can earn better returns in comparison to bank Savings Account in such a short-duration.

The focus of the fund manager is more on managing the duration in order to maximize the returns. So, the fund manager selects a relatively higher duration when the interest rates are in the downward trend and this helps in maximizing capital gains from the rising bond prices. One the other hand, when the interest rates are rising, protection is provided against capital losses in the portfolio by minimizing the duration of the fund.

The returns offered by low duration funds are usually steady and stable. However, the returns offered vary from one plan to another. We have shortlisted some of the best SIP Plans in low duration funds in 2020-2021:

  1. ICICI Prudential Savings Fund: 03% of the investment is in Debt funds of which 8.24% in Government securities, 87.88% in funds invested in very low risk securities.
  2. Kotak Low Duration Fund: 2% of the investment is in Debt funds, out of which 88.82% is in very low risk securities and 2.74% account to Government securities.
  3. IDFC LOW duration FUND: This fund makes 73% of investment in Debt funds, out of which 92.91% is in very low risk securities and 2.82% account to Government securities.
  4. Invesco India Treasury Advantage fund: 89% of investment is in Debt out of which 96.89% is invested in very low risk securities.
  5. Axis Treasury Advantage Fund: This fund makes 96.83% of investment in Debt funds, out of which 85.79% is in very low risk securities and 11.04% in Government securities.
Name of the Fund Expense Ratio NAV as on January 2020 (Rs.) Fund Size Absolute Returns 6M Crisil Rank
Axis Treasury Advantage Fund 0.57% 2228.8355 3948.66 Cr  3.93 4 Stars
ICICI Prudential Savings Fund  0.5% 383.4689  21306.46 Cr  3.73 4 Stars
IDFC Low Duration Fund 0.48% 28.1881 5323.26 Cr  3.73 4 Stars
Invesco India Treasury Advantage Fund 0.65% 2759.3171 1566.99 Cr  4.01% 5 Stars
Kotak Low Duration Fund 1.07% 2434.1268 5963.45  4.30 3 Stars

Disclaimer: “Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by an insurer.”

(The table doesn’t represent a chronological order and the returns are subject to market risk)

If you are still in two minds about keeping your extra money in your bank savings account or starting an SIP for six months, then SIP makes sense if you are ready to take some market risk. To achieve any of your short-term goals or to take up that vacation, you can definitely consider any of the above-mentioned best sip plans for six months in either low duration or ultra-short duration funds.

Bottom-line

Now that you know the fund category you can start your SIP for a short-duration in any of the above listed plans. However, you can consider other SIP plans from different fund houses also. But before investing make an informed choice on the basis of NAV, Fund size, average returns, Expense ratio, and Crisil rating.