Analysing the factors propelling mutual funds into one of the most popular investments options is unlikely to unearth any surprises. They are fairly easy to invest in, and as an investor, you? re not expected to understand the nuances of the market in detail. It certainly helps that they are considered safer than other options while simultaneously delivering healthy returns.
Tech-savvy millennials and older investors in traditional investments like FDs are now gravitating towards Mutual Funds in a big way. However, with a lot of fund houses offering different schemes of mutual funds, investors can understandably get confused about which one to pick. Most Mutual fund schemes differ from one another on various parameters. They could be different in terms of asset class - equity, debt or hybrid or be open or closed ended funds. Some funds also differ in whether they are actively or passively managed. A particular type of investment option that has emerged as a popular one among investors, is the concept of SIPs. SIPs or Systematic Investment Plans, allow investors to channel a pre-determined amount of capital at regular intervals into their preferred mutual fund, as opposed to a lump-sum, one-time investment.
SIPs are a superior choice in many ways. The idea here is to average the cost of your investment, allowing it to be distributed over a longer time period. The advantages are plenty - an investor can beat market volatility, while simultaneously being able to avoid the annoying practice of ?timing the market?. It's a more disciplined approach to investing, especially beneficial for new investors who do not wish to take a lot of stress. On that note, here are some of the best SIP plans that an investor can consider:
1 Aditya Birla Sun Life Frontline Equity Direct-Growth
Offered by the Aditya Birla Sun Life Mutual Fund house, this fund has 95.07% of its corpus in equity assets or the stock market. With an AUM of over Rs. 20K Cr and an expense ratio of 1.24%, the risk an investor here has to bear is moderately high since it is highly oriented towards equity. As of September 2019, it has delivered annualized returns of 5.92% over the last year and 13.29% over the last 5 years.
2 ICICI Prudential Bluechip Fund Direct Plan-Growth
Offered by ICICI Prudential Mutual Fund, this fund has 87.53% of its assets in equity. The fund size is a little over Rs. 21K Cr. The expense ratio is slightly more encouraging than Aditya Birla's Frontline Equity fund, at 1.21%. Since this is also an equity fund, the risk is moderately high as well. As of September 2019, annualized returns for this fund stand at 11.55% (for the last year) and 12.18% (over five years).
3 SBI Blue Chip Fund - Growth
Offered by the SBI Mutual Fund house, this fund is tilted significantly in favor of the Indian stock market, with over 90.83% of its funds. Another well-sized fund with an AUM of Rs 21K Cr, it remains a moderately high-risk option. Annualized returns here are on the lower side, with 7.50% (for one year) and 9.99% (for five years).
4 Edelweiss Government Securities Fund
One of the leading debt funds in the market, the Edelweiss Government Securities Fund Despite having a fairly small AUM value of Rs 80 crores, it is a fairly low-risk fund. At the same time, it boasts of some compelling returns. As of September 2019, its annualized returns for the last year stood at over 17.25%, while they were at 10.52% measured over 5 years.
5 IDFC Sterling Value Fund Direct-Growth
Offered by IDFC Mutual Fund, the total AUM of this scheme stands at Rs 2.8K Crores. The expense ratio is 1.02%. The risk here is rated moderately high, owing to its high equity preference. As of September 2019, while the annualized returns for the last year is unimpressive at -3.05%, they stand at a respectable 12.34% over the last 5 years.
How to Invest in The Best SIP Plans?
There are plenty of methods of investing in mutual funds - via banks, brokers or even financial planners. However, they often charge different fees, commissions, charges, and whatnot which ultimately reduces your own returns. To save yourself these unnecessary expenses, you can invest in SIP plans directly using a platform.
There are several benefits to investing in SIP plans via a direct mutual fund offering. For starters, there are no hidden brokerage or distribution charges, so you know from the start what you will be paying. All these savings are passed to the investor, who now enjoys superior returns.
How to create a Mutual Fund account?
1) Visit the account creation page of the platform you want to sign up with and enter your details? your PAN and date of birth
2) If your KYC is already done, you will be able to start investing right away. If not, you may have start your KYC process online or offline. You will need your PAN no and an address proof document to get started. Furthermore, you need a bank account in your name to start investing from and to get funds back in case of redemption.
3) Your bank account details will be verified. Once it is complete, you can start investing in mutual funds.
4) Once your KYC is done at any one platform, you can invest in Mutual Funds through any platform.
Note that you don't need to open a DEMAT account to invest in Mutual Funds even though some platforms make you do so. Most platforms nowadays will charge you no fee to invest in Direct Mutual Funds which are commission-free. Most platforms will also offer recommendations and ratings from rating agencies to help you choose where to invest. While fund selection remains vital, what matters most is investing regularly, with a goal in mind and staying in it for the long haul.
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