Many investors find SIP a prudent way to grow wealth in the long run. SIP, or the systematic investment plan, is one of the easiest and hassle-free ways to invest in mutual funds. Individuals can invest in any mutual fund at fixed intervals through SIP. It can be weekly, monthly, or quarterly. Many types of investments require lump-sum investments at the beginning. But with SIP, you can invest small sums gradually over a period of time. SIP is your best choice if you are a small or first-time investor. Over the years, SIP has gained significant acceptance.
We will discuss the best mutual funds for SIP in this article.
What is a SIP?
SIP allows investors to invest a fixed amount at regular intervals towards mutual funds. It is designed for small and beginner investors who don’t want to invest in a lump sum. In a SIP scheme, the investor can select to pay a fixed amount monthly, quarterly or weekly. Depending on their financial goals, one can choose from large-cap, mid-cap, small-cap, multi-cap, and equity-linked schemes. You can find the best SIP to invest in each category based on your requirements.
In these schemes, the mutual fund invests in large-cap companies with a market capitalisation of more than 200,00 crore. Investors who want to avoid market volatility exposure and earn moderate income can invest in these schemes.
Some of the best mutual funds for SIP in this category are:
- Aditya Birla SL India GenNext Fund (G)
- Aditya Birla Top 100 Fund
- ICICI Pru Dynamic Plan
- ICICI Pru Top 100 Fund
- Quantum LT Equity Fund (G) Direct Plan
- Reliance Growth Fund (G)
- SBI Bluechip Fund – Reg (G)
- Tata Equity P/E Fund (G)
Mid-cap companies have a market capitalisation of Rs 5000- 20,000 crore.
Mid-cap mutual funds invest in the corpus into mid-size companies on their growth path to create more and faster capital appreciation. These schemes are usually targeted at investors with moderate to high-risk appetites.
In this category, you can find some of the best SIP plans for 5 years.
- Aditya Birla SL Small & Midcap Fund (G)
- Canara Rob Emerg Equities Fund – Reg (G)
- Edelweiss Mid and Small Cap Fund – Reg (G)
- Franklin India Smaller Cos Fund (G)
- L&T Midcap Fund – Reg (G)
- Sundaram Select Midcap (G)
Small-cap mutual funds
Investors who want to increase the value of their investment and are ready to take higher risks can invest in small-cap mutual funds. These schemes focus on investing in small-cap companies with a market capitalisation of Rs 5000 crore or less.
Here are some of the best mutual funds for SIPs in the small-cap category.
- Quant Small-cap Fund
- BOI AXA Small-cap Fund
- Canara Rob Small-cap Fund
- Kotak Small-cap Fund
- Edelweiss Small-cap Fund
- Axis Small-cap Fund
- Union Small-cap Fund
- Nippon India Small-cap Fund
- Tata Small-cap Fund
- SBI Small-cap fund
Equity-linked Savings Plans
Equity-linked savings plans allow investors the benefit of tax savings and building wealth for the future. Investors can save tax under section 80c of the Income Tax Act.
Some of the best ELSS plans are the following.
- Aditya Birla SL Tax Plan (D)
- Aditya Birla SL Tax Relief ’96
- DSPBR Tax Saver Fund – Reg (G)
- Invesco India Tax Plan (G)
- L&T Tax Advt Fund – Reg (G)
- Reliance Tax Saver (ELSS) Fund – G
- Tata India Tax Savings Fund – Reg DP
Benefits of SIP
SIP offers several benefits, including the advantages of compounding returns. Compounding happens when the returns you generate get re-invested in the scheme. Over time it results in a snowball effect, and you generate higher returns from your investment. Besides, SIP also offers benefits like:
- Rupee cost averaging
- Small initial investment
- Easy automation of SIP deduction through standard instruction
- It helps build savings and investment discipline
Also Read: Top 3 Mutual Funds Beating The Market
We hope the blog has helped you learn about the top 10 mutual funds for SIP to invest in 2022.
Historically, equity investment has generated the highest returns on investment. But it is not for every type of investor. Those who want to invest in stocks but can invest small amounts and don’t want exposure to market volatility can invest through SIP plans. However, calculating SIP return manually can be a complex work. Now easily calculate the return with Angel One SIP Calculator. Once you are ready to start investing, find the best SIP plan to invest with Angel One.
Disclaimer: This blog is exclusively for educational purposes. The securities quoted are exemplary and are not recommendatory.