SIP Mutual Fund

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What is SIP Mutual Fund?

Systematic Investment Plan (SIP) is a smart investment instrument wherein a specific amount is deducted on a monthly basis in a mutual fund. As a simple and disciplined investment option SIP helps the investors to invest a small amount regularly in order to create a financial cushion for the future. In the case of market fall, the investors can buy more units of mutual fund in the next instalment. Thus, at the time when the market recovers the investors will receive higher returns as compared to the lump-sum investment.

How SIP Works?

In SIP Mutual Funds, the investors can invest a predetermined amount at a monthly, weekly and quarterly basis according to one’s own suitability and requirement. In order to start to SIP the investors are required to fill the SIP form and a bank mandate. The amount is deducted automatically from the bank account on a predetermined date and is invested in the chosen mutual fund scheme as per the applicable NAV (Net Asset Value).

How SIP Investment is Better than Lump-Sum?

As compared to the lump-sum investment, systematic investment plans are often considered a better investment option. This is because in most cases SIP Mutual Fund offers better returns in long-term as compared to lump-sum investments. Since in SIP the investments are made periodically, it offers the benefit of fixed sum investment and frequency of investment.

As in SIP investment, a fixed amount is invested at a regular interval of the time one does not need to time the market. This means that the investors can buy more units when the market is low and fewer units when the market is high. This results in lower average price converting to higher returns. On contrary to this, in lump-sum investment, the risk involved is more as the return on investment totally depends on the market performance of the fund. This means that in lump-sum investment one do not have control over the market therefore, the chances are high that the investment made by an individual can go into loss if the market does not perform well.

Another reason why SIP Mutual Fund investment is considered a better investment option is that in SIP investment one can make the small investment over a long-term period and earn a higher return as compared to the lump-sum investment. Unlike lump-sum investment, in SIP, the minimum investment can be made of Rs.500-Rs1000 and there is no upper limit on the maximum investment amount.

How to Choose the Best Mutual Funds to Invest Through SIP?

Further, in this article, we have shortlisted top performing equity mutual funds which is one of the best options for investment for investors who want to gain a high return on investment by investing through SIP. The key aspects of choosing the best performing mutual funds are:

  • Check the past 3-5 years performance of the funds.
  • Check the CRISIL (Credit Ration Information Services of India Limited) rating of funds.
  • Consider investing in funds that have been placed on the top of the CRISIL list.

Best SIP Funds to Invest

Let’s take a look at the best SIP funds to invest. For the better understanding of our readers, here we have shortlisted funds based on the types of funds and 5-years returns.

Fund Name

Returns

 

3 years

5 years

SBI Small Cap Fund

23.0%

34.74%

Reliance Small Cap Fund

22.5%

35.82%

L&T Emerging Businesses Fund

24.1%

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UTI Transformation & Logistics Fund

11.4%

30.16%

Mirae Asset Emerging Bluechip

18.5%

29.80%

Aditya Birla Sun Life Pure Value Fund

17.23%

30.80%

SBI Small Cap Fund

This is an open-ended equity scheme that aims to provide long-term capital growth to the investors by making investment majorly in equity stocks of small-cap companies. This scheme is ranked number 2 by CRISIL in the small-cap category. This fund is best suitable for investors who have a moderately high-risk appetite and wants to accumulate wealth over a long-term period by gaining a higher return on investment.

Reliance Small Cap Fund

This is an open-ended equity scheme which aims to provide long-term capital growth to the investors by making investment predominantly in equity and equity instruments of small cap companies. Besides this, the plan also aims to generate steady returns by investing in money market and debt securities. This scheme is considered as one the best performing SIP mutual funds scheme in the small-cap category. Reliance small-cap fund is a great option of investment for individuals who have a high-risk appetite and wants to create corpus over a long-term period by gaining high returns on investment.

L&T Emerging Businesses Fund

As an open-ended equity scheme, the main objective of the plan is to provide long-term capital growth to the investors by making investment majorly in equity and equity oriented securities. This scheme majorly invests in equity stocks of small-cap companies. L&T Emerging Businesses Fund is best suitable for investors who have a high-risk appetite and wants to gain a high return on investment over a long-term period.

UTI Transformation & Logistics Fund

As an open-ended scheme, the fund majorly invests in equity and equity-related securities. This scheme operates in the transportation and logistics sector and aims to generate long term capital growth to the investors. This fund is best suitable for investors who have a high-risk appetite and wants to gain medium to long-term returns on investment.

Mirae Asset Emerging Bluechip

This is a mid-cap fund in which 35% of the money is invested in large-cap stocks and the rest 65% is invested in mid-cap stocks. The main objective of the fund is to generate wealth over a long-term period. This plan is best suitable for investors who have a high-risk appetite.

Aditya Birla Sun Life Pure Value Fund

Launched in the year 2008 Aditya Birla Sun Life Pure Value Fund is equity-based investment scheme which mainly deals in shares of mid-cap companies. The primary aim of this scheme is to provide capital growth with the investment made in equity and equity related instruments. This plan is best suited for investors who want to gain maximum returns on investment over a long period of time.

Debt Fund

Debt Fund

Returns

 

3 years

5 years

Aditya Birla Sun Life Savings  Fund Growth Regular Plan

7.92%

8.42%

L&T Low Duration Fund Growth

8.1%

8.55%

Reliance Credit Risk Fund

6.47%

7.68%

Aditya Birla Sun Life Short Term Opportunities Fund-Regular Plan Growth

7.35%

8.3%

SBI Magnum Gilt Fund Regular Growth

8.04%

10.13%

Aditya Birla Sun Life Savings Fund Growth Regular Plan

This is an open-ended scheme which majorly invests in debt fund for the ultra-short duration. As one of the top performing SIP mutual fund debt scheme, the major objective of the fund is to provide a consistent average return to the investors. As this is a low-risk investment option, this plan is best suitable for investors who have a low-risk appetite and wants to gain a consistent return on investment.

L&T Low Duration Fund Growth

This is an open-ended scheme in which the majority of the funds are invested in debt and low-risk securities. As one of the top performing mutual fund, L&T Low Duration Fund Growth offers moderate to low risk to the investors. This is best for investors who want to gain a regular return on investment and have a low to moderate risk appetite.

Reliance Credit Risk Fund

The major investment objective of this fund is to generate maximum returns consistent with a moderate risk level. The plan aims to generate capital appreciation in the long-term. As one of the top performing mutual fund, the investment is majorly made in debt and money market instruments. This plan is best suited for investors who want to gain regular and steady returns on investment over a long period of time.

Aditya Birla Sun Life Short Term Opportunities Fund-Regular Plan Growth

As one of the top performing SIP mutual funds the primary objective of the scheme is to generate income along with the benefit of capital appreciation in the long-term. Under this fund option up to 100% of the investment is made in debt and money market instrument. As an open-ended debt fund, this is a great investment option for individuals who has a moderate risk appetite and who wants to generate regular income in a long-term period.

SBI Magnum Gilt Fund Regular Growth

As one of the best SIP mutual funds scheme, the major objective of the scheme is to generate regular income through investments in government securities issued by the central and state government.  This fund is best suited for individuals who have a moderate risk appetite and who want to make a safe investment for a longer-term period.

Balanced Fund

Balanced Fund

Returns

 

3 years

5 years

L&T Hybrid Equity Fund

8.76%

15.79%

SBI Equity Hybrid Fund

9.28%

14.98%

HDFC Balanced Fund

10.40%

16.07%

ICICI Prudential Equity and Debt Fund

11.22%

15.83%

L&T Hybrid Equity Fund

This is an open-ended scheme which makes the investment in equity and equity-related securities.  Under this fund option, the investment is also made in debt and money market instruments. The main objective of the scheme is to generate profitable returns along with the benefit of long-term capital appreciation.  Under this fund option, maximum 75% of the fund is invested in an equity fund, whereas, 35% of the fund is invested in debt and money market instruments.  This fund option is beneficial for investors who have a high-risk appetite and who want to gain a higher return on investment over a long-term period.

SBI Equity Hybrid Fund

This is an aggressive hybrid plan which aims to provide long-term capital appreciation to the investors, along with the liquidity of open-ended scheme. Under this fund option, the investment is made in the combination of debt and equity instruments.  SBI Equity Hybrid Fund invests in different sections of equity in order to create capital growth and stabilizes the risk by investing the remaining assets in fixed income instruments.  This fund option is best suitable for investors who want to gain regular income from the investment.

HDFC Balanced Fund

As one of the top performing SIP mutual funds, HDFC Balanced Fund aims to provide long-term capital growth by investing in a dynamic mix of equity and debt funds. This fund option is best suitable for investors who want to gain regular income from the investment.

ICICI Prudential Equity and Debt Fund

As the name suggests this fund invests in a combination of both debt and equity instruments. As one of the best SIP mutual funds, the scheme aims to provide regular income with the benefit of long-term capital appreciation. This is a balanced fund which provides the investor portfolio with the boost in returns and portfolio stability.  This is best suitable for investors who have a high-risk appetite and who want to gain profitable market returns over a long-term period.

Equity Fund

Equity Fund

Returns

 

3 years

5 years

Mirae Asset equity Fund Regular Growth 

13.96%

18.65%

L&T India Value Growth

10.44%

21.65%

 SBI Magnum Multi Cap Fund Regular Growth

11.02%

18.22%

Aditya Birla Sun Life Frontline Equity Fund Growth

10.24%

14.44%

ICICI Prudential Bluechip Fund Growth

11.44%

14.24%

SBI Bluechip Fund Regular Growth

8.76%

15.52%

Mirae Asset Equity Fund Regular Growth 

As an open-ended equity fund, Mirae Asset Equity Fund Regular Growth focuses to generate long-term capital growth to the investors by making investment majorly in equity and equity-related securities.  The scheme is available under a direct and regular plan with separate NAV and common portfolio. Each plan is available under two options- growth and dividend plan.  This plan is best suitable for individuals who have a high-risk appetite and who want to generate capital appreciation in the long-term.

L& T India Value Growth

As one of the best Sip mutual funds, this is an open-ended equity fund which provides an opportunity for the investors to earn higher returns on investment by making the investment in equity and equity-related securities. The scheme can also invest in foreign securities in the international market. This is a lucrative option of investment for investors who have a high-risk appetite and who want to gain higher returns on investment over a long-term period.

SBI Magnum Multi Cap Fund Regular Growth

This is an open-ended equity scheme which is specifically designed to provide investors with the opportunity to gain long-term growth while ensuring ample liquidity of the scheme. Under this fund option, the investment is majorly done in equity and equity-related securities. These fund options are best suitable for individuals who have a high-risk appetite and who want to make capital appreciation over a long period of time along with the benefit of investment returns.

Aditya Birla Sun Life Frontline Equity Fund Growth

Launched in the year 2008 Aditya Birla Sun Life Frontline Fund Growth is an equity-based investment scheme which mainly deals in shares of mid-cap companies. The primary aim of this scheme is to provide capital growth with the investment made in equity and equity related instruments. This plan is best suited for investors who want to gain maximum returns on investment over a long period of time.

ICICI Prudential Blue-chip Fund Growth

ICICI Prudential Blue Chip Fund majorly focuses on investing in the leading 20 companies in the topmost 200 companies listed on the National Stock Exchange. However, after crossing the mark of Rs.1000 crores, ICICI Prudential Blue Chip Fund majorly invests in large-cap fund stocks which guarantees consistency and stability for those individuals who want to gain long-term capital appreciation. The fund has been consistently outperforming in the market and has been rated as one of the best SIP plans for those who want to make a systematic investment in equity.

SBI Blue-chip Fund Regular Growth

This is an open-ended growth scheme which offers an opportunity for the investors to accumulate wealth over a long period of time. In this fund, the investments are majorly made in stocks of Blue Chip Companies. SBI Blue Chip Fund invests 70% of the amount in equity and equity related securities and the rest 30% of the amount is invested in debt instruments, money market instruments, and foreign securities.

Benefits of Investing in SIP Mutual Funds                                  

Let’s take a look at the benefits of investing in SIP mutual funds.

Disciplined Investing Approach

For any successful investment, keeping a disciplined approach towards it plays a vital role. Investing in SIP mutual funds helps the investors to maintain the regularity of investment. Also,  it helps the investors to achieve their financial objectives.

Takes Advantage of Rupee Cost Averaging

With the benefit of rupee-cost averaging the investors can invest pre-determined amount regularly, either monthly or quarterly. So, instead of making a one-time investment as lump-sum the investor can make regular investments at specific intervals of time over a long-term period. With the advantage of rupee cost averaging one does not need to time the market. Since the amount invested in SIP mutual fund is constant, one can purchase more units when the price is low and can lessen units when the price is high. During market fluctuation, the investors can achieve a lower average cost per unit by the method of rupee cost averaging.

Convenient, Simple and Easy to Monitor

SIP mutual funds investment is a hassle-free and convenient mode of investment. One can simply inform the banks to enable the option of auto-debits from the bank account. Moreover, one the investors can monitor and track their fund performance from time to time.

Power of Compounding

The most remunerative way to create corpus is to start making investments as early as possible and invests regularly. A pre-determined amount invested on a regular basis can ultimately multiply double over a long-term period. With the advantage of the power of compounding, the investor can reinvest the interest amount and can stay invested in SIP mutual fund for a long term and can accumulate wealth for a long period of time.

Why invest in SIP Mutual Funds?

Investing in SIP mutual fund is one of the most lucrative ways to achieve short-term and long-term financial goals. One of the main reasons why one should consider investing through SIP is that it inculcates the habit of savings among investors. Moreover, through the process of SIP investment one can also save themselves from the market fluctuation and can achieve their long-term and short-term financial goals of life.

How Do Mutual Funds Work?

SIP mutual funds have a simple process of working. Mutual funds are essentially a type of investment instrument where the money is collected by different investors who share a mutual financial objective.  The pool of money as collected by various investors is managed by the fund managers. The fund managers invest the money into market linked investment instruments such as bonds, shares, company stocks, equity, etc. with an objective to provide capital growth and investment returns to the investors.  The Securities and Exchange Board of India manages and regulated the mutual funds in India. Investing in SIP mutual funds is considered as one of the safest and simplest ways to accumulate wealth over a long-term period.