Best Mutual Funds for SIP

Investing in mutual funds via Systematic Invest Plan (SIP) is the best way to creating wealth in the long-term. SIP is a way to regularly invest a fixed amount in mutual fund schemes.

Jun 03, 2018 05:06 IST India Infoline News Service Jitender Singh |

Investing in mutual funds via Systematic Invest Plan (SIP) is the best way of creating wealth in the long-term. SIP is a way to regularly invest a fixed amount in mutual fund schemes. Investors get the benefit of rupee cost averaging, compounding, and disciplined investing, and can beat the volatility of the stock markets through SIPs.

Besides, SIP amount gets auto-debited from the bank accounts of the investors, which gives the latter flexibility to increase, decrease, or stop the SIP anytime. Moreover, investors can invest as low as Rs500 in a scheme per month. SIP is gaining traction among retail investors as they also want to create wealth in the long-term. However, even though many retail investors know their objectives, not all of them know the best vehicle which can take them to their goals. In order to help these investors realize their targets, below are our highly recommended "vehicles (mutual funds)" for investors.
 
Scheme Name AUM
(Rs cr)
Absolute
Return
CAGR Return Present Value of Rs10,000 p.m. SIP (in Rs lakhs)
1 Y (%) 3 Y (%) 5 Y (%) 3 Y 5 Y 10 Y
HDFC Balanced Fund(G) 21,779 7.9 11.1 18.8 4.3 8.7 28.5
ICICI Pru Equity & Debt Fund(G) 28,807 7.0 10.9 17.5 4.3 8.5 27.2
Axis Focused 25 Fund(G) 3,714 23.0 15.7 18.4 4.9 9.7 --
Tata Equity P/E Fund(G) 3,520 13.5 15.5 24.5 4.8 10.2 32.3
DSPBR Midcap Fund-Reg(G) 5,720 8.9 16.3 25.8 4.6 10.2 35.7
(Returns and SIP values as of May 31, 2018; AUM as of April 30, 2018; Source: ACE MF)

HDFC Balanced Fund
  • HDFC Balanced Fund aims to maintain an effectively diversified portfolio across market capitalizations.
  • The fund invests in companies that enjoy a leadership position in their industry with superior growth prospects and is available at a reasonable price.
  • The fund manager actively manages the debt portfolio based on the interest rate outlook. Securities are selected after assessing credit, interest rate, and liquidity risk.
  • As on April 30, 2018, the fund has invested ~28% of its AUM in debt instruments, ~46% in large-cap stocks, ~14% in mid-cap stocks, and ~7% in small-cap stocks.
  • Investors who want to follow a balanced approach, i.e. ~65% equity and ~35% debt, can invest in the scheme to create wealth in the long-term.
ICICI Pru Equity & Debt Fund (Erstwhile ICICI Pru Balanced Fund)
  • It is an equity-oriented balanced fund which does tactical allocation between debt and equity based on the market outlook to ensure optimal risk-reward.
  • The fund increases its exposure in debt markets when the market is overvalued and increases its allocation to equity when the market is undervalued.
  • As on April 30, 2018, the fund had invested ~26% of its AUM in debt, ~57% in large-cap stocks, and ~6% in mid-cap stocks.
  • Investors who want to follow a balanced approach, i.e. ~65% equity and ~35% debt, can invest in the scheme to create wealth in the long-term.
Axis Focused 25 Fund
  • It is an equity fund that invests in high conviction stocks, maximum 25 stocks, from top 200 stocks by market capitalization.
  • The fund’s strategy is to invest in quality companies with credible management, sustainable profit growth and cash flow, and a clean balance sheet.
  • As of April 30, 2018, the fund has invested ~60% of AUM in large-cap stocks and ~29% is allocated to mid-cap and small-cap stocks to give steady growth over the long-term.
  • Investors who want to take exposure in high conviction large-cap and mid-cap stocks can invest in the fund to create wealth in the long-term.
Tata Equity P/E Fund
  • It is a value-conscious equity fund that aims to invest 70-100% of its AUM in stocks whose 12-month rolling PE ratio is lower than the 12-month rolling PE ratio of BSE Sensex.
  • The remaining AUM is allocated in other equity and debt instruments.
  • As of April 30, 2018, the fund has invested ~69% of AUM in large-cap stocks and ~25% is allocated to mid-cap and small-cap stocks to generate higher returns over the long-term.
  • Investors who are value-conscious and want to invest in large-cap and mid-cap stocks can invest in the fund.
DSP BlackRock Mid-Cap Fund
  • It invests in stocks beyond top 100 companies, based on market capitalization.
  • The fund manager invests in small-cap and mid-cap stocks with consistent earnings and significant growth potential. He follows a bottom-up approach to select the stocks.
  • As of April 30, 2018, ~66% of its AUM was invested in mid-cap stocks, ~15% in large-cap stocks and ~15% in small-cap stocks to generate high returns for investors.
  • Investors who want to primarily invest in mid-cap and small-cap stocks can invest in this fund to create wealth in the long-term.

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