Want to invest for the long-term? Still investing in fixed deposits?
Ever considered investing in a systematic investment plan? If not, then this article will tell you why.
Systematic investment plan or SIP is one of the most popular investment mediums in today’s day and age. Simple reason being that investing in mutual funds, through an SIP is extremely convenient and hassle free.
What Is an SIP?
An SIP or systematic investment plan is a mode of investment wherein an individual invests a particular amount of money and every month the chosen amount gets debited from the individual’s account automatically.
The investor can choose the interval at which the deduction will take place. For example, quarterly, monthly or weekly.
One of the major reasons why people prefer investing in SIPs is because of compounding.
For example, you invest Rs. 1000 in a fund. In one year that fund gives you a return of 10%. Your principal value has now become Rs. 1100.
Suppose in the next year, the fund gives a return of 11%, this time around your returns will be calculated on Rs. 1100 and not Rs. 1000.
Which means your investment now amounts to Rs. 1221.
In this article, we will have a look at the 5 best SIP plans that you can consider investing in.
1. HDFC Small Cap Fund
Regarded as one of the best mutual funds in the small cap category, this fund has given exceptional returns in the past. The fund was launched on 30th June 2000 and is managed by HDFC Bank Mutual Fund.
The fund primarily invests in sectors such as services (18.6%), chemicals (17.7%) and engineering (12.2%),
Its top holdings are in companies like
Its major holdings are in NIIT Technologies Ltd, Sonata Software Ltd, Aurobindo Pharma Ltd.
| Key Details | |
| Launch Date | 30th June 2000 |
| AUM (Fund Size) | 6,164 Crores |
| Minimum SIP Amount | ₹500 |
| Benchmark | Has consistently outperformed its benchmark NIFTY Small-cap 100 TRI |
| Expense Ratio | 0.81% |
| Risk Grade | Moderately High |
Why Should You Invest in this Fund?
If you are looking for long-term capital appreciation and your ideal investment duration is at least 5-6 years then you can consider putting your money in this fund.
2. Mirae Asset Emerging Blue-chip Fund
Launched in 30th November, 2007, this large and midcap fund has proven to be one of the best in its category.
This fund is recommended more so because it only supports SIP investments and not lump sum.
The sectors in which it invests primarily are, financial (30.8%), energy (10.2%), healthcare (9.8%).
The top holdings of this fund are in marquee companies like, HDFC Bank Ltd, ICICI Bank Ltd, Axis Bank Ltd.
| Key Details | |
| Launch Date | 30th November, 2007 |
| AUM (Fund Size) | ₹6,444 Cr |
| Minimum SIP Amount | 1000 |
| Benchmark | It has consistently outperformed its benchmark NIFTY Large Midcap 250 Index since its launch. |
| Expense Ratio | 0.61% |
| Risk Grade | Moderately High |
Why Should You Invest in this Fund?
If you are the type of investor who wants to avoid taking too much risk, but at the same time want decent returns, then investing in this fund can be a good choice.
3. L&T Emerging Businesses Fund
Here is another small cap fund which could be ideal for an SIP investment. This is a comparatively new fund, but shows strong fundamentals and good future prospect.
The sectors it primarily invests in are, engineering (13.2%), construction (12.3%) and chemicals (11.8%)
Its top holdings are in companies like Persistent Systems Ltd, Mahanagar Gas Ltd and The Ramco Cements Ltd.
| Key Details | |
| Launch Date | 12th May, 2014 |
| AUM (Fund Size) | ₹5,516 Cr |
| Minimum SIP Amount | 500 |
| Benchmark | It has consistently outperformed its benchmark S&P BSE Small Cap TRI since its launch.. |
| Expense Ratio | 0.85% |
| Risk Grade | High |
Why Should You Invest in this Fund?
If you are looking to invest in a fund which revolves around the high risk – high return policy, then this can prove to be an ideal investment.
4. SBI Bluechip Fund
Considered one of the best large cap funds in the industry, this fund has provided excellent returns for the past 31 years.
It has continuously outperformed its benchmark index and has strong fundamentals rooting for it.
The major sectors it allocates in are financial (36.1%), FMCG (10.4%), automobile (9.1)
Its
major holdings are in companies like HDFC Bank Ltd, Larsen & Toubro Ltd and
ITC Ltd.
| Key Details | |
| Launch Date | 29th June, 1987 |
| AUM (Fund Size) | 20,292 Cr |
| Minimum SIP Amount | ₹500 |
| Benchmark | Has consistently outperformed its benchmark BSE S&P 100 |
| Expense Ratio | 1.19 % |
| Risk Grade | Moderately High |
Why Should You Invest in this Fund?
If you want to invest in a reputed name and are not willing to take an immense amount of risk with your investment, then SBI Bluechip Fund can be a good choice.
5. HDFC Mid-Cap Opportunities Fund
Another good equity oriented fund from HDFC Mutual Fund. This is a mid-cap fund, which has consistently beaten its benchmark and has given good returns over the years.
The fund invests in companies like Cholamandalam Investment Finance and Co. Ltd, Sundaram Fasteners Ltd and Balakrishna Industries.
The top sectors it invests in are financial (24.8%), engineering (12.3%) and chemicals (11.1%).
| Key Details | |
| Launch Date | 30th June, 2000 |
| AUM (Fund Size) | ₹20,539 Cr |
| Minimum SIP Amount | ₹500 |
| Benchmark | Has consistently outperformed its benchmark S&P BSE Mid Cap TRI |
| Expense Ratio | 1.22 % |
| Risk Grade | Moderately High |
Why Should You Invest in this Fund?
If you want to attain decent returns over a substantial investment duration then investing in this fund can be a good choice.
Conclusion
An SIP plan not only inculcates discipline to your financial life, but also helps you achieve your long-term financial goals.
If you haven’t invested in an SIP yet, then choose a plan which suits your investment requirement and start investing now!