An SIP (Systematic Investment Plan) is a smart, hassle-free method of investing a fixed sum in a mutual fund scheme. It permits one to purchase units on a particular date every month in order to implement a saving plan. One can invest a particular prearranged amount at regular intervals that are chosen beforehand (quarterly, monthly, weekly, etc.). One of the biggest advantages of this plan is that it inculcates the habit of saving in the user so that they can start to build a respectable fund for the future.
The saying ‘the early bird catches the worm’ holds true for an SIP, as you can benefit greatly from starting early. An important aspect of an SIP is the fact that maintaining it is hassle-free; your money will be auto-debited from your bank account each month and will also be invested into a mutual fund scheme of your choice. When you go for an SIP for your investing needs, there is no need to time the market. There is also a disciplined approach to investments. What’s more, you can take advantage of two powerful investment strategies: Power of Compounding and Rupee Cost Averaging.
Best Performing SIP Mutual Funds
Based on the above criteria, we have made a list of the best performing mutual funds that can be invested through an SIP in different categories of large-cap, small-cap, multi-cap, and equity-linked saving schemes.
Large-Cap Schemes
Schemes that invest in firms with a market capitalisation of over Rs.20,000 crore are known as large-cap schemes. They are ideal for investors who wish to accumulate wealth without exposing their investments to a volatile market. Below are the top performing large-cap schemes:
| Scheme Name | 5-Year Monthly SIP | 10-Year Monthly SIP | ||
|---|---|---|---|---|
| Present Value of Rs.6 lakh Invested | XIRR | Present Value of Rs.12 lakh Invested | XIRR | |
| Aditya Birla SL India GenNext Fund (G) | Rs.10,48,446 | 22.95% | Rs.35,27,792 | 20.63% |
| Aditya Birla SL Top 100 Fund (G) | Rs.9,43,785 | 18.53% | Rs.28,56,912 | 16.69% |
| ICICI Pru Dynamic Plan (G) | Rs.9,46,152 | 18.64% | Rs.28,57,413 | 16.69% |
| ICICI Pru Top 100 Fund (G) | Rs.9,41,591 | 18.43% | Rs.27,57,958 | 16.02% |
| Quantum LT Equity Fund (G) – Direct Plan | Rs.9,15,695 | 17.27% | Rs.28,82,955 | 16.86% |
| Reliance Growth Fund (G) | Rs.10,75,057 | 24.01% | Rs.30,73,348 | 18.05% |
| SBI BlueChip Fund – Reg (G) | Rs.9,55,955 | 19.07% | Rs.28,57,343 | 16.86% |
| Tata Equity P/E Fund (G) | Rs.11,49578 | 26.86% | Rs.34,73,254 | 20.34% |
| Templeton India Growth Fund (D) | Rs.10,16,220 | 21.63% | Rs.28,65,778 | 16.74% |
Mid-Cap Schemes
Mid-cap schemes invest in companies that have a market capitalisation ranging between Rs.500 crore to Rs.10,000 crore. Investors with high risk appetite and wanting to grow their investments at a fast pace should invest in these kinds of schemes. Below are the best performing funds in this segment:
| Scheme Name | 5-Year Monthly SIP | 10-Year Monthly SIP | ||
|---|---|---|---|---|
| Present Value of Rs.6 lakh Invested | XIRR | Present Value of Rs.12 lakh Invested | XIRR | |
| Aditya Birla SL Small & Midcap Fund (G) | Rs.13,23,508 | 32.92% | Rs.42,18,830 | 23.96% |
| Canara Rob Emerg Equities Fund – Reg (G) | Rs.13,14,645 | 32.63% | Rs.48,38,179 | 26.51% |
| Edelweiss Mid and Small Cap Fund – Reg (G) | Rs.12,64,097 | 30.93% | Rs.42,94,253 | 24.29% |
| Franklin India Smaller Cos Fund (G) | Rs.12,77,332 | 31.38% | Rs.47,29,377 | 26.09% |
| L&T Midcap Fund – Reg (G) | Rs.13,37,343 | 33.37% | Rs.43,89,015 | 24.70% |
| Sundaram Select Midcap (G) | Rs.12,11,517 | 29.10% | Rs.41,04,930 | 23.45% |
Multi-Cap Schemes
This type of scheme invests in stocks of large, mid, and small companies and are ideal for investors with low risk appetite. Below are the top performing schemes in this category:
| Scheme Name | 5-Year Monthly SIP | 10-Year Monthly SIP | ||
|---|---|---|---|---|
| Present Value of Rs.6 lakh Invested | XIRR | Present Value of Rs.12 lakh Invested | XIRR | |
| Aditya Birla SL Advantage Fund (D) | Rs.10,86,635 | 24.46% | Rs.31,54,786 | 18.54% |
| Aditya Birla SL Equities Fund (G) | Rs.10,62,428 | 23.51% | Rs.31,32,942 | 18.41% |
| DSPBR Opportunities Fund – Reg (G) | Rs.10,59,532 | 23.39% | Rs.31,22,204 | 18.35% |
| Franklin India High Growth Cos Fund (G) | Rs.10,62,666 | 23.52% | Rs.35,15,164 | 20.56% |
| HDFC Capital Builder Fund (G) | Rs.10,47,417 | 22.91% | Rs.32,39287 | 19.03% |
| IDFC Premier Equity Fund – Reg (G) | Rs.10,04,444 | 21.12% | Rs.34,70,007 | 20.32% |
| Kotak Opportunities Fund (G) | Rs.10,01,061 | 21.00% | Rs.28,94,647 | 16.93% |
| L&T India Spl. Situations Fund – Reg (G) | Rs.10,29,111 | 22.16% | Rs.31,77,810 | 18.68% |
| Principal Growth Fund (G) | Rs.11,13,167 | 25.49% | Rs.31,94,146 | 18.77% |
| Reliance Reg Savings Fund – Equity Option (G) | Rs.10,44,421 | 22.78% | Rs.30,31,976 | 17.80% |
| Reliance Top 200 Fund (G) | Rs.9,86,966 | 20.40% | Rs.28,70,308 | 16.77% |
| SBI Emerging Business Fund – Reg (G) | Rs.10,47,848 | 22.92% | Rs.37,02,130 | 21.53% |
| SBI Magnum Multicap Fund – Reg (G) | Rs.1060,999 | 23.45% | Rs.29,99,412 | 17.60% |
| SBI Magnum Multiplier Fund – Reg (D) | Rs.10,31,727 | 22.27% | Rs.30,93,165 | 18.17% |
| Sundaram Rural India Fund (G) | Rs.11,39,195 | 26.47% | Rs.32,79,043 | 19.26% |
Equity-Linked Savings Schemes
Equity-Linked Savings Schemes is an equity-centric mutual fund that can help the investor save tax as well as build wealth. The top performing funds in this category are given below:
| Scheme Name | 5-Year SIP | 10-Year SIP | ||
|---|---|---|---|---|
| Present Value of Rs.6 lakh Invested | XIRR | Present Value of Rs.12 lakh Invested | XIRR | |
| Aditya Birla SL Tax Plan (D) | Rs.10,60,921 | 23.45% | Rs.31,52,856 | 18.53% |
| Aditya Birla SL Tax Relief ’96 (ELSS U/S 80C of IT Act) (D) | Rs.10,78,500 | 24.14% | Rs.31,92,955 | 18.77% |
| DSPBR Tax Saver Fund – Reg (G) | Rs.10,47,913 | 22.93% | Rs.32,18,953 | 18.92% |
| Invesco India Tax Plan (G) | Rs.10,10,072 | 21.38% | Rs.32,03,378 | 18.83% |
| L&T Tax Advt Fund – Reg (G) | Rs.10,56,510 | 23.27% | Rs.31,65,438 | 18.60% |
| Reliance Tax Saver (ELSS) Fund (G) | Rs.11,18,452 | 25.69% | Rs.36,32,707 | 21.17% |
| Tata India Tax Savings Fund – Reg (DP) | Rs.10,82,096 | 24.28% | Rs.32,57,362 | 19.14% |
Why should you invest in an SIP?
One of the prime reasons why you should invest in an SIP is because it brings a sense of discipline in your investments and cultivates regular saving habits. Saving small and regularly is the philosophy that an SIP revolves around. It enables the investor to build wealth over a long-term. Besides this, an SIP offers many other benefits. We’ve listed the most important ones, below:
- Rupee Cost Averaging - SIPs can aid in averaging the cost return ratio. The equity market being volatile in nature will enable the investor to purchase more units when the price of shares are low and lesser units when the shares are priced higher. SIPs give regular investors the chance to garner more shares at low prices than investors who invest a large sum of money at once.
- Power of Compounding - According to the principle of compound interest, any small amount of money when invested for a longer period of time can get compounded and fetch you good returns. As a result, the investor will be able to accumulate a large corpus and achieve long-term financial goals by investing small but at regular intervals.
- Is not heavy on the wallet - Investment made through an SIP can be as low as Rs.500. Such a low amount will not burden your budget and over a period of time, this amount will grow to fetch you substantial returns.
- Automated Payments - Even if you are someone who is regular when it comes to making investments, you may sometimes miss out on making the payments. An SIP eliminates this by automating the payments which means that every month, a predetermined amount will automatically be deducted from your bank account. So, there is no way that you would miss out on making the payments.
- Funds can be used for emergencies - An SIP offers a one-click withdrawal option where you can withdraw the amount anytime you want. This fund can be used to meet any contingencies such as job loss, accidents, illnesses, etc.
- Eliminates the need for timing the market - Since SIPs are regular investments, you do not have to worry about if the market is performing good or bad. Over time, even if there have been highs and lows, the performance of the fund will even out. This will ensure that irrespective of the market volatility, you will be able to enjoy good returns.
How to achieve more with SIP?
To derive maximum benefits from an SIP, ensure that you do the following:
- Make a list of your goals and calculate the amount of saving you need to do to achieve your goals.
- Determine how much amount you wish to invest monthly/quarterly through SIP in order to fulfill your goals.
- Research the mutual fund market and check which funds have performed well over the past years. Once you have done that, you will be able to figure out which plan to invest in through an SIP.
- All mutual fund investments require investors to complete the KYC documentation process along with other formalities like submission of cheques and forms. Complete the process and start investing.
- To reap good returns on your investments, choose a plan on a long-term basis.
- You can invest in multiple SIPs to diversify your investments and optimise the returns.
How to choose the best mutual fund to SIP?
With more than 5,500 mutual fund schemes available in India, choosing the right one to invest through an SIP is no easy task. The equity category alone has around 300 schemes and there are other categories such as debt and gold. Though finding the right mutual fund is not easy, below are some pointers that can help you navigate through the various options and choose the ideal one.
- Objective of investment - All investments have an objective. It could be for buying a house, saving up for a marriage, going for a vacation, children’s education, etc. Depending on the goal, the investment can be for short-term or long-term. If you are saving for your children’s education or for your retirement, it will be a long-term goal but if you are saving up for buying a car, for example, it will be a short-term goal. If you’re looking at achieving your long-term goal, investing in equity funds can be a good option. For achieving short-term goals, you can invest in debt funds and money market funds. Before investing, ensure that you assess your objectives and align it with your risk appetite.
- Knowledge about the fund house - The fund house is responsible for managing your money and you expect them to take care of your investments. While choosing a fund house, see to it that you have thorough knowledge about them because they are the ones who will take investment decisions on your behalf. Research about the fund house before investing through them by asking relevant questions like how many schemes they offer, what is the approach they follow while investing, does it offer innovative products, etc.
- Performance of the fund - Fetching good returns is the ultimate objective of any investor. Therefore, before investing it is imperative that you research about the returns the fund has given over different periods and make a comparison of it with the benchmark index. You can find the information about how a fund has performed by doing a web search.
- Expense ratios and loads - Though these costs are relatively small, they can make a huge difference in the returns when considered for a long term. Look for funds that are without or lower load prices and with low expense ratios. The information about load and expense ratios can be found in the scheme documents or fund fact sheets.
- Experience of the fund manager - Apart from knowing about the fund house, it is also important that you do some research about the fund manager. Analyse how funds managed by him/her have performed especially when the markets encountered hard times. A good fund manager will manage your investments efficiently to help you achieve greater returns and hence, it is vital that the fund manager has expertise in a wide variety of investment categories.
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