1.  Introduction

Many miss out on the benefits of SIP because they chase timing over time. Market timing is considered as the right time to invest to maximize returns. Truth be told, there is no way to predict these things. By delaying your investments you are missing out on one of the most precious resources, time. As the saying goes “it’s better late than never.” The same applies to investments. The earlier you start and the longer you stay invested, the more you benefit. Bearing that in mind, the concept of SIP has been developed which allows you to start with small amounts of investment done on a regular basis which can be build up to larger sums. It instills the qualities of discipline and consistency which will ultimately help you in creating wealth. It is super flexible and eliminates the mental load of deciding what the right time to invest is by automating payments thereby allowing you to invest in markets regularly irrespective of the market swings.

So today through RankMF knowledge center, we present the top SIP plans you should consider for investments and also educate you about the basics of SIP and all the information and details about mutual funds you will need. Before you begin investing in mutual funds in India, it is essential to know the basics of SIP.

2. What is a SIP?

A SIP is a mode of investment in mutual funds. It allows you to invest a fixed amount periodically (weekly, monthly, quarterly) in a mutual fund scheme. It works in an automated manner as in once you pre-set the SIP date to let’s say Jan 5th and you fix the amount to Rs. 1000 with the frequency of investment set as monthly, you will find that on the 5th of every month, Rs. 1000 is auto-debited from your bank account and invested in your selected mutual fund scheme. If you want to know more about SIP, you can see our article here.

3. Benefits of investing through SIP

· Higher Returns than FDs:

If you’re a small-time investor and do not possess the resources to play with the big league players, this method empowers you. With SIP, even the retail investors, can earn above-average returns than investing in traditional instruments like recurring deposits, fixed deposits, and PPFs, and choose the level of risk exposure. The risks component is averted due to the diversified portfolio of the scheme, with only a fraction of your earnings dipped into the market.

· Disciplined approach:

SIP help you mix up your price exposure in the mutual fund scheme of your choosing. The average price of the accrued units slides either way across the scale with the market whipsaws. You get more units when the markets are lagging, and fewer units with markets are booming. But you, as an investor, are bound to the regiment of saving in a regular manner through SIP. This style of investing, balloons your units in the scheme at a lower average purchasing cost. Thus, when redeeming the units at the higher NAV, you end up with lakhs or crores in your balance.

· Simple, convenient & easy to monitor:

SIP looks out for your convenience and even authorizes your banks to make hassle-free payment without your involvement every single time. This is made possible with a little piece of paper called the Mandate. This paper needs your authorization in the form of signature. Nowadays, the fund house and AMCs got electronic means to get this accomplished.  Basically, this mandate grants the necessary permission for the funds houses to make the necessary deductions at the time of fund accumulations.

· Rupee Cost Averaging:

Rupee cost averaging is an effective strategy as it helps you get immune to the market whipsaws and to average your purchase cost and maximizes returns. All one has to do is to invest a fixed pre-decided amount of money on a regular basis for a long period of time.

In the graph above, if the investor invests through the SIP mode, he makes a monthly SIP payment of Rs. 500 (Rs. 500 x 12 months = Rs. 6000). In the month of January when the NAV is higher i.e. Rs. 15, he gets 33 units in that month whereas when the NAV is lower as it is in the month of March – Rs. 10, he gets more units in that month i.e. 50 units for the same SIP amount of Rs. 500. Throughout the year he makes a fixed monthly investment of Rs. 500 and gets units as per the NAV on the date of investment. At the end of the year, his average cost per unit comes down to Rs. 12.67 and he holds 484 units which is higher than what he would hold under the lump sum mode. This is how rupee-cost averaging works, through regular SIP investment, you get more units when the markets are lagging and fewer units when markets are booming. To know more-Read our full article on How SIP Plan Works?

· Compounding effect:

The concept of compound interest is that interest is added back to the principal sum so that interest is earned on that added interest during the next compounding period. A small amount of money invested regularly can grow to a large sum. This helps in creating a substantial amount of wealth which includes your own contribution, plus returns compounded over the years.

In the graph above, the effects of compounding are explained using 5 different scenarios –

SIP Amount Annual Average Return Time frame
Rs. 1000 10% 25 years
Rs. 1000 15% 25 years
Rs. 1500 10% 25 years
Rs. 2000 10% 15 years
Rs. 2000 15% 15 years

It explains how the power of compounding works over a longer time frame. As you can see by delaying payment by 10 years, even when you double your SIP amount you still earn lower in comparison to SIPs made 10 years earlier. To reach a level of that which is reached by Rs. 1000 SIP plan compounded at 10%, if you delay your investments by 10 years you would have to start SIP at a higher amount  Hence to benefit from the power of compounding

· Wealth creation over a longer term:

SIP investment allows you to start with investments with small amounts and still build a decent sized corpus. The amount generated over a span of 30 years would be much higher than the total garnered over 10 years. The graph below shows wealth creation by starting SIP at various stages in life. An amount of Rs. 1000 is invested monthly until the retirement age of 60 years. The rate of return on investment was assumed at 10% p.a.

It can be seen that even a five-year delay can make a significant reduction in the overall creation of wealth. If you wish to build good wealth with the minimum amount invested in a staggered manner, then you need to start investing early and stay invested for long. This helps you to build a large corpus that helps you to achieve your long-term financial goals.

4. How to choose a SIP plan using RankMF?

If you don’t know which mutual funds to invest in, simply log in to RankMF. To access our proprietary ratings, you need to open a free paperless account with us. Once on our landing page, you simply browse through our ratings of top mutual funds in each category. Go through all the pertinent details put together for you for your own analysis. We also guide you as to which funds are ‘Sahi’ for investment.

Here is how to invest in Mutual Fund through SIP mode using RankMF.<Hyperlink>

5. Process to invest in SIP Plan through RankMF:

At RankMF, we provide an online investment platform wherein we rate and rank all the mutual funds schemes. We evaluate every mutual fund and help you select the best mutual funds out there. To begin your SIP Investment, click on the image below:

  1. Select the fund scheme you’d like to begin a SIP with. You can do this by going through the Mutual Fund rankings available on RankMF, or by referring to our list of top SIP funds below.
  2. Once you’ve selected the Mutual Fund you want to invest in, click on ‘SIP’ at the top/upper-right corner of the page to begin.
  3. On clicking on SIP, you will need to enter your SIP amount and select the date for monthly SIP deduction and other details crucial to initiate your SIP.
  4. Ensure sufficient funds in your Samco account/bank account every time the amount is due.
  5. The amount opted for the SIP is debited automatically from your bank account and invested into the specific mutual fund on the pre-decided date every time.
  6. You are then allocated a certain number of units of stock according to the market rate going on for that day, also known as NAV or Net Asset Value.
  7. At anytime if you wish to check your ledger, log into RankMF, go to Account > Order History and SIP Calendar.
  8. To increase your SIP amount, you can place another order along with the existing one. To decrease the amount, you should cancel the existing SIP and start a new SIP with a lower amount.
  9. One can stop SIP at anytime by simply logging into your RankMF account and clicking on ‘Cancel’.

 

6.Top SIP plans in India: 2018

Scheme Type Returns
Mirae Asset Emerging Bluechip Fund Large & Mid-Cap Fund 18.35%
Canara Robeco Emerging Equities Fund Large & Mid-Cap Fund 15.46%
Invesco India Contra Fund Contra Fund 14.55%
Principal Emerging Bluechip Fund Large & Mid-Cap Fund 14.16%
Axis Mid Cap Fund Mid-Cap Fund 14.14%
Tata Equity P/e Fund Value Fund 13.45%
Kotak Emerging Equity Scheme Growth Mid-Cap Fund 13.45%
Dsp Midcap Fund Mid-Cap Fund 12.78%
Principal Hybrid Equity Fund Aggressive Hybrid Fund 12.50%
Franklin India Prima Fund Mid-Cap Fund 12.31%
Hdfc Balance Advantage Fund Balanced Hybrid Fund 11.74%
Franklin India Smaller Companies Fund Small-cap Fund 11.58%
Sundaram Mid Cap Fund Mid-cap Fund 11.39%
Icici Prudential Equity & Debt Fund Aggressive Hybrid Fund 10.92%
Sbi Equity Hybrid Fund Aggressive Hybrid Fund 10.75%
Canara Robeco Equity Hybrid Fund Aggressive Hybrid Fund 10.48%

 (Source: RankMF as on 08/02/2019)

 

We further list top 10 SIP plans with pertinent details of the schemes:

  1. Mirae Asset Emerging Bluechip Fund

This fund is managed by Mirae Asset Global Investment Management.

Fund Strategy: The scheme is to generate income and capital appreciation from a portfolio primarily investing in large cap and mid cap companies.

RankMF Rank 269
Minimum SIP Amount Rs. 1000
Inception Date 9 Aug, 2010
NAV Rs. 49.85
Type Large & Mid Cap Fund
AUM Rs. 6339.62 Cr
Expense Ratio 2.26%
Exit Load 1% on or before 1 year; Nil after 1 year
Benchmark S&P BSE SENSEX – TRI
3-year XIRR 13.35%
5-year XIRR 18.35%
Inception XIRR 22.18%

 

  1. Canara Robeco Emerging Equities Fund

This fund is managed by Canara Robeco Asset Management Company Limited

Fund Strategy: The scheme objective is to generate capital appreciation by investing in a diversified portfolio of large and mid-cap stocks.

RankMF Rank 224
Minimum SIP Amount Rs. 1000
Inception Date 14 Mar, 2005
NAV Rs. 89.04
Type Large & Mid Cap Fund
AUM Rs. 4096.85 Cr
Expense Ratio 1.98%
Exit Load 1% on or before 1 year; Nil after 1 year
Benchmark S&P BSE SENSEX – TRI
3-year XIRR 9.63%
5-year XIRR 15.46%

 

  1. Invesco India Contra Fund

This fund is managed by Invesco Asset Management Company Pvt Ltd.

Fund Strategy: The scheme objective is to generate capital appreciation by investing in securities through contrarian investing.

RankMF Rank 152
Minimum SIP Amount Rs. 500
Inception Date 9 Apr, 2007
NAV Rs. 45.58
Type Contra Fund
AUM Rs. 3083.82 Cr
Expense Ratio 2.18%
Exit Load 1% on or before 1 year; Nil after 1 year
Benchmark S&P BSE 500 – TRI
3 year XIRR 12.72%
5 year XIRR 14.55%

 

  1. Principal Emerging Bluechip Fund

This fund is managed by Principal Asset Management Company Private Limited.

Fund Strategy: The scheme objective is to generate capital appreciation by investing in a diversified portfolio of large and mid-cap stocks.

RankMF Rank 92
Minimum SIP Amount Rs. 500
Inception Date Nov 10, 2008
NAV Rs. 98.65
Type Large & Mid Cap Fund
AUM Rs. 2054.33 Cr
Expense Ratio 2.12%
Exit Load 1% on or before 1 year; Nil after 1 year
Benchmark NIFTY 50 – TRI
3 year XIRR 8.91%
5 year XIRR 14.16%

 

  1. Axis Mid-Cap Fund

This fund is managed by Axis Asset Management Company Ltd.

Fund Strategy: The scheme objective is to achieve long term capital appreciation by investing in Mid Cap companies.

RankMF Rank 21
Minimum SIP Amount Rs. 1000
Inception Date Nov 10, 2008
NAV Rs. 34.8
Type Mid Cap Fund
AUM Rs. 1807.64 Cr
Expense Ratio 2.4%
Exit Load Nil on 10% of investments and 1% on remaining on or before 1 year; Nil after 1 year
Benchmark S&P BSE Mid-Cap – TRI
3 year XIRR 14.11%
5 year XIRR 14.14%

 

  1. Tata Equity P/e Fund

This fund is managed by Tata Asset Management Limited.

Fund Strategy: The scheme objective is to provide reasonable and regular income and/or possible capital appreciation. It seeks to invest in stocks that are deemed to be undervalued with high growth prospects.

RankMF Rank 39
Minimum SIP Amount Rs. 500
Inception Date June 28, 2004
NAV Rs. 127.41
Type Value Fund
AUM Rs. 5175.53 Cr.
Expense Ratio 1.99%
Exit Load 1% on or before 18 months; Nil after 1 month
Benchmark S&P BSE SENSEX – TRI
3 year XIRR 9.63%
5 year XIRR 13.45%

 

  1. Kotak Emerging Equity Scheme Growth

This fund is managed by Kotak Mahindra Asset Management Company Limited

Fund Strategy: The scheme objective is to achieve long term capital appreciation by investing in Mid Cap companies.

RankMF Rank 174
Minimum SIP Amount Rs. 1000
Inception Date March 26, 2007
NAV Rs. 35.76
Type Mid-Cap Fund
AUM Rs. 3494.49 Cr
Expense Ratio 2.14%
Exit Load 1% on or before 1 year; Nil after 1 year
Benchmark Nifty Midcap 100 – TRI
3 year XIRR 6.91%
5 year XIRR 13.45%

 

  1. Dsp Midcap Fund

This fund is managed by DSP Investment Managers Private Limited.

Fund Strategy: The scheme objective is to achieve long term capital appreciation by investing in Mid Cap companies.

RankMF Rank 30
Minimum SIP Amount Rs. 500
Inception Date Nov 13, 2006
NAV Rs. 50.62
Type Mid-Cap Fund
AUM Rs. 5703.63 Cr
Expense Ratio 2.12%
Exit Load 1% on or before 1 year; Nil after 1 year
Benchmark Nifty Midcap 100 – TRI
3 year XIRR 7.32%
5 year XIRR 12.78%

 

  1. Principal Hybrid Equity Fund

This fund is managed by Principal Asset Management Company Private Limited.

Fund Strategy: The scheme seeks long-term capital appreciation and current income from a balanced portfolio of equity and debt securities.

RankMF Rank 45
Minimum SIP Amount Rs. 500
Inception Date Jan 17, 2000
NAV Rs. 75.21
Type Aggressive Hybrid Fund
AUM Rs. 1674.54 Cr
Expense Ratio 2.18%
Exit Load Nil upto 24% of units within 1 year; 1% in excess of limit within 1 year; Nil after 1 year
Benchmark NIFTY 50 – TRI
3 year XIRR 11.54%
5 year XIRR 12.50%

 

  1. Franklin India Prima Fund

This fund is managed by Franklin Templeton Asset Management (India) Private Limited

Fund Strategy: The scheme objective is to achieve long term capital appreciation by investing in Mid Cap companies.

RankMF Rank 270
Minimum SIP Amount Rs. 500
Inception Date Nov 29, 1993
NAV Rs. 907.89
Type Mid-Cap Fund
AUM Rs. 6573.27 Cr
Expense Ratio 2.03%
Exit Load 1% on or before 1 year; Nil after 1 year
Benchmark Nifty Midcap 100 – TRI
3 year XIRR 6.99%
5 year XIRR 12.31%

 

Key criteria used for selecting the following plans/funds for SIP:
  1. Ratings: RankMF top-rated funds with a buy recommendation have been placed towards the top of the list.
  2. Coverage: The study was restricted to open-ended, actively managed, diversified equity funds. We have considered regular plans with growth option and eliminated the dividend payout and dividend reinvestment plans. We have also filtered out thematic and index funds.
  3. Asset Size: Only schemes with a corpus of at least Rs 500 crore were taken into consideration.
  4. IRR: Fund performance was looked over the period of 5 years using the average internal rate of return (IRR) as the cash flows are occurring at irregular intervals.
  5. Look-back Period: For a fund to qualify, the fund scheme has been in duration for at least 5 years. Funds that have not completed 5 years have been filtered out. Five-year period ranges from Jan 2014 to Dec 2018, which makes 60 monthly installments in total.

Methodology:

RankMF uses the following calculations for shortlisting the equity funds.

We have assumed a monthly SIP of Rs 1,000 for a five-year period starting from Jan 1st, 2014, the total amount invested is Rs. 60000 and SIP date is assumed 1st of every month. After 5 years we take the redemption value from RankMF SIP calculator for every scheme and calculate the XIRR for all the schemes. After all the calculations, we select schemes based on the criteria above and rank them on the basis of their XIRR for the five-year period. This gives us the top SIP performers.

Disclaimer: In case of SIP, since there are multiple investments (therefore multiple purchase prices) and different time periods for each installment, calculating returns is a bit tricky. Returns on mutual fund SIP is commonly done in terms of XIRR. We have made certain assumptions as to the SIP amount and date of investment.

This covers the topic on best SIP plans in India. For more useful articles on Mutual Funds, trading, investing and market knowledge, visit our Investor Education section.

(Note: This content is for information purpose only Avoid trading and investing based on the information given above. Before investing in stocks or mutual funds, please conduct proper due diligence.)

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