Best mutual funds for SIP in 2022
Mutual funds are a professionally managed investment vehicle which allows you to invest in debt instruments, real estates, gold, silver, equities and other financial instruments.
In recent times, mutual funds have gained extreme popularity, especially the SIPs. There are several reasons behind it, some of them have been mentioned below –
- Mutual fund investments have proved to be an ideal investment option for fulfilling most of your financial goals in life. Financial Goals can be Tax Saving, Wealth Creation, Retirement Planning, Children’s Education, etc.
- Mutual funds in India are well regulated by SEBI, RBI and Indian Trusts Act, 1882 which ensures investors interest is protected.
- Mutual fund schemes offer a unique benefit of diversification at the lowest possible investment. You can start investing with as little as ₹100 in mutual fund schemes and get the diversification of several assets in your Portfolio.
In this article, we will discuss more about the SIPs and the best mutual funds in India for SIPs.
What is SIP (Systematic Investment Plan)?
SIP or Systematic Investment Plan is an investing style offered by almost all the mutual funds in India which allows investors to invest a fixed amount in regular time intervals in selected mutual fund schemes. The time interval and investment amount which is predetermined can be changed or stopped anytime as per your will without any charges, fine or penalties.
How to identify the best mutual funds in India?
Based on the past performance of over 2 decades, one can easily see that mutual fund investments had been extremely rewarding. However, it is not true for everyone.
Most investors fail in creating decent returns simply because of their ignorance towards the potential risk of a Mutual fund scheme. More-so-ever, the rewards of taking these risks aren’t guaranteed. To be a successful investor, you should have a defined set of rules/plans before you make any mutual fund investments.
Below are 8 golden rules that you should definitely consider while learning mutual fund investments:
Be aware of your risk appetite:
An individual’s risk appetite may depend on his income, expenses, liabilities, dependents, taxability, age and willingness.
Hence, you should first determine your risk-taking ability and willingness. Most individuals make mutual fund investments on suggestions from friends or colleagues or seeing it on advertisements without understanding the risk defined for the mutual fund scheme.
In order to evaluate the best mutual funds in India, it is important to consider the scheme’s investment objective and strategy. Both of these can help in understanding what to expect from the scheme and if it’s suitable for your risk profile. You should read all the scheme related documents thoroughly before investing.
Do appropriate research:
Mutual fund investments made on the gut feel or on the basis of past performance can be extremely risky.
During market boom, most funds tend to perform well. And when the market corrects, schemes you invest in may give negative returns. Also, a top performing mutual fund may not remain top performer forever or near the other top performers. Hence, investing without proper research may not be a wise approach.
You may use the data available in scheme documents such as Variance, Standard Deviation, Beta, Mod Duration, Sharpe Ratio, Treynor Ratio, Jenson’s Alpha, Tracking Error, etc to measure the risk and expected returns of investment in a scheme and for comparison with other schemes.
Keep adequate liquidity:
An individual who does not have sufficient cash in hand to pay for their daily expenditures or immediate liabilities may not be able to hold their mutual fund investments for a longer period.
The mutual funds schemes are best suited to those who have a long-term holding vision. Cashing out on gains or booking a loss quickly due to lack of liquidity is not recommended for long term wealth generation.
You can overcome this challenge by creating an emergency liquid fund, having adequate Insurance cover and making provisions for all near term liabilities before planning an investment in a mutual fund scheme for a longer time horizon.
Avoid panic selling on market corrections:
Investments are subject to market volatility in mutual fund schemes. When markets rise, your mutual fund investments go up in value. And during the market fall, the value of your investment goes down too.
However, historical data shows that markets have rebounded and gone up over the time. Selling your mutual fund units in panic due to poor performance in the short term isn’t the right way to invest.
Checking your unit NAV daily or weekly isn’t a good habit, we recommend holding the units of your mutual fund investments for at least a year. As rebalancing of long-term investments is recommended on a yearly basis.
Selecting investment options based on your financial goals:
Mutual fund schemes offer investment options like SIP (Systematic Investment Plan), SWP (Systematic Withdrawal Plan), STP (Systematic Transfer Plan) and Lump Sum.
Choose an investment option based on your financial goal:
Wealth creation – It is a long-term goal and so it would be best to make mutual fund investments through SIP as you can avail the benefit of rupee cost averaging on the units you get.
Nearing Retirement – You may start mutual fund investments through STP which would ensure that the asset allocation from equities is reduced on a regular time interval and is adjusted to bonds and other debt instruments, ensuring reduction in risk at regular time intervals.
On Retirement – You may opt for mutual fund investments through SWP which would provide a regular withdrawal and a constant cash flow to manage daily expenditures.
Lump Sum – You may gift/donate Mutual fund units through a Lump Sum investment.
Keep an eye on taxes and expense loads:
Both taxes and expense loads reduce investment returns. You should consider these two aspects during repurchases/redemptions and must assess the implications of capital gains tax and exit loads.
Don’t forget to add a nominee:
While applying for investments in a mutual fund scheme, an investor often forgets to mention their nominees. Nomination helps the AMCs managing the mutual fund scheme to transfer your investments to the legal heirs smoothly, which otherwise is a long and time-consuming legal procedure. You can add up to 3 nominees in a mutual fund application and also specific asset allocation to each nominee.
Don’t invest without proper guidance:
There are thousands of mutual fund schemes available for investment resulting in a problem of choice. Moreover, not everyone has the required knowledge of doing their own research. Some may not have the time and willingness to do the research and rebalancing.
Hence, it’s important you consult a AMFI Certified Mutual Fund Advisor who has the expertise and knowledge to assist you in mutual fund investments by providing advice on appropriate scheme selection, procedure to apply and withdraw from a mutual fund scheme and rebalancing your Portfolios on regular time intervals.
What are the best mutual funds in India for SIP in 2022?
Below is the list of best mutual funds in India for SIP based on performance of these mutual funds in 2022:
| TOP LARGE CAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Axis Bluechip Fund – Growth |
4.01 |
11.55 |
12.24 |
13.22 |
|
Canara Robeco Bluechip Equity Fund – Growth |
0.77 |
15.30 |
14.61 |
13.67 |
|
UTI MasterShare Fund – Growth |
0.77 |
16.76 |
13.95 |
12.88 |
|
Aditya Birla Sun Life Frontline Equity Fund – Growth |
1.30 |
17.35 |
13.25 |
12.63 |
| TOP LARGE AND MID CAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Canara Robeco Emerging Equities Fund – Growth |
2.63 |
20.81 |
16.61 |
18.69
|
|
ICICI Prudential Large & Mid Cap Fund – Growth |
8.16 |
25.73 |
18.13 |
14.49 |
| TOP FLEXICAP / FOCUSED FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
UTI Flexi Cap Fund – Growth |
5.57 |
16.67 |
15.52
|
14.62 |
|
Kotak Flexi Cap Fund – Growth |
1.78 |
15.35 |
12.67 |
14.04 |
|
ICICI Prudential Focused Equity Fund – Growth |
3.19 |
21.23 |
16.06 |
13.26 |
| TOP MIDCAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Axis Midcap Fund – Growth |
3.94 |
21.43 |
19.10
|
18.18 |
|
Kotak Emerging Equity – Growth |
11.06 |
28.26 |
21.17 |
19.60 |
|
Edelweiss Mid Cap Fund – Growth |
10.51 |
28.78 |
20.97 |
19.09 |
| TOP SMALL CAP FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Axis Small Cap Fund – Growth |
9.97 |
30.85 |
24.97 |
- |
|
Nippon India Small Cap Fund – Growth |
15.22 |
39.85 |
26.65 |
24.00 |
|
ICICI Prudential Small Cap Fund – Growth |
11.80 |
35.75 |
24.55 |
17.52 |
| TOP VALUE/CONTRA/DIVIDEND YIELD FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Invesco India Contra Fund – Growth |
5.12 |
19.41 |
15.31 |
16.12 |
|
ICICI Prudential Value Discovery Fund – Growth |
6.42 |
25.73 |
18.60 |
15.93 |
|
UTI Dividend Yield Fund |
6.12 |
16.14 |
13.21 |
12.10 |
| TOP SECTOR FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Invesco India Infrastructure Fund – Growth |
6.39 |
26.33 |
19.48 |
16.30 |
|
SBI Infrastructure Fund – Growth |
11.68 |
25.90 |
18.26 |
14.54 |
|
ICICI Prudential Technology Fund – Growth |
25.05 |
25.15 |
23.85 |
20.09 |
| TOP ELSS FUNDS | ||||
|---|---|---|---|---|
|
Scheme |
1Y |
3Y |
5Y |
10Y |
|
Kotak Tax Saver Fund – Growth |
5.73 |
20.23 |
16.27 |
14.92 |
|
Axis Long Term Equity Fund – Growth |
7.32 |
10.93 |
11.30 |
14.21 |
|
Canara Robeco Equity Tax Saver – Growth |
2.27 |
20.34 |
17.74 |
15.53 |
Conclusion:
The best mutual fund scheme for you would be based on your need for investment (Goals), risk profile, time horizon and returns expectation, there isn’t one scheme that will be best suited for all. Consult an AMI Registered Advisor for help regarding mutual funds investments at no fee charged to you directly.
Happy Investing!
