Which is the best mutual fund for SIP? I think this is the most common question I came across followed by “share top 10 mutual funds for SIP”; be it TFL, through mail or even newspapers where I answer personal finance query section. Sometimes I replied – sometimes I ignored – sometimes I made up my mind to write but dropped the idea after few minutes. People who are regular readers must be knowing why I am not able to answer this question – others can read my earlier article on Magic of Systematic Investment Plan (SIP).
But Anil Kumar Kapila came as much needed help – he prepared a short note on how one can select the best SIP or make better mutual fund portfolio. I am publishing it as it is – Just added performance Tables that may interest you.
Guidelines for Choosing Best Mutual Fund for SIP in India
While going through the comments of readers on the posts I have observed that most of the readers are asking the same questions again and again. The most common question is regarding the best equity mutual funds available SIP. Although you have answered this question many times, the investors seem to be confused. Hence I think it will be a good idea if some broad guidelines are given. Accordingly, I have prepared some guidelines. You can go through these and see if these can be shared.
Broadly, equity mutual funds can be classified as follows:
Equity Large Cap Mutual Funds
- DSPBR Top 100 Equity
- ICICI Prudential Focused Bluechip Equity
- Franklin India Bluechip
|DSP BlackRock Top 100 Equity||5.61||-1.94||0.08||6.40||16.11||18.78|
|Franklin India Bluechip||2.95||-3.43||-0.82||6.69||18.64||16.78||27.06|
|ICICI Prudential Focused Bluechip Equity||5.55||-3.50||0.98||10.63||21.35|
Equity Large and Midcap Mutual Funds
- Fidelity India Growth
- HDFC Top 200
- ICICI Prudential Dynamic
|LargeCap & MidCap Funds|
|Fidelity India Growth||5.42||-3.52||-1.21||4.88||19.13|
|HDFC Top 200||4.37||-3.40||0.15||6.48||21.55||20.25||31.77|
|ICICI Prudential Dynamic Ret||4.80||-1.92||0.61||7.22||18.15||18.67|
Equity Mid and Small Cap Mutual Funds
- HDFC Midcap Opportunities
- Birla Sunlife Pure Value
- IDFC Premier Equity
|MidCap & SmallCap Funds|
|Birla Sun Life Pure Value||4.37||-0.65||2.72||-1.25||24.95|
|HDFC Mid Cap Opportunities||6.43||6.49||9.05||13.38||26.29|
|IDFC Premier Equity Plan A||7.19||1.55||4.85||7.98||23.32||29.33|
Equity Multi-Cap Mutual Funds
- HDFC Equity
- Quantum Long Term Equity
- Reliance Equity Opportunities
|Quantum Long Term Equity||4.03||-3.86||-2.58||5.53||22.29||18.14|
|Reliance Equity Opportunities Ret||6.75||1.54||4.28||7.73||25.51||18.96|
Equity Value Funds
- Birla SL Dividend Yield Plus
- ICICI Prudential Discovery
- UTI Dividend Yield
Equity Sector Funds
- Reliance Banking
- ICICI Prudential FMCG
- UTI Pharma and Healthcare.
- UTI MNC Fund
- Birla SL India Gen Next
- Kotak Lifestyle Fund
Check – best mutual fund for sip consistent?
While selecting the funds from the above-mentioned list Core and Satellite approach has to be adopted. The core of the portfolio will consist of comparatively safe Large and Large and Midcap Funds. The satellite component will have funds from the other above categories. Satellite will have comparatively risky funds. While core provides stability to the portfolio satellite gives the potential for high returns. The allocation between the two components depends on the risk appetite of the investor. Conservative investor will have a larger allocation in the core and aggressive investor will tilt the balance towards satellite.
Diversification in SIP Mutual Fund Portfolio
A portfolio should have a minimum of two funds and a maximum of five to seven funds. This is needed for the purpose of diversification. Also while selecting the funds, not more than one should be selected from the same group. Diversification across fund houses is also needed. Keep only one fund from a particular fund house in the portfolio. A typical portfolio will have one fund each from Large Cap, Largecap and Midcap, Multicap, Mid and Smallcap. One or two funds from other groups can be included in the portfolio if required.
Best Mutual Fund for SIP
First of all thanks a lot to Anil who has taken out time & wrote this masterpiece for fellow readers. I have seen his comments on various posts & 80-90% of our views match so there was no reason that I have not published this. I think this article will be really helpful for the people who are having “best mutual fund for sip” question in their mind + few tips on diversification will also help you to reduce some unsystematic risk. As a couple of days back we discussed the selection of the fund is not the most important factor in your investment success. (Read Secret of Achieving high returns) So even if you stick with points that are shared by Anil – you still will be doing better than most of the investors.
But still, there is a lot of scope to reduce risk in once portfolio. Even in the selection of fund risk should be given an equal weightage to returns if not more. How my performance table would have looked if I was comparing these funds.
|Birla Sun Life Pure Value|
|DSP BlackRock Top 100 Equity|
|Fidelity India Growth|
|Franklin India Bluechip|
|HDFC Mid Cap Opportunities|
|HDFC Top 200|
|ICICI Prudential Dynamic|
|ICICI Prudential Focused Bluechip|
|IDFC Premier Equity Plan A|
|Quantum Long Term Equity|
|Reliance Equity Opportunities Ret|
I have removed half of the columns to keep it bit simple. I have also not divided it in types of funds because I just wanted to share what an advisor looks into before selecting a fund – there are many other variables which are considered before suggesting a fund. For this table I have chosen 3 years data as few of the funds in the list have not completed 5 years.
If you like to learn about these technical aspects of mutual funds – I will try to write. You can read about Standard Deviation in Mutual Funds.
In case you have some questions regarding mutual Funds or SIP feel free to ask. Also, share this with your funds who are confused about choosing best mutual funds.Disclaimer: This post represents the opinion of its author only, and does not necessarily reflect the opinions of the author’s employer, The Financial Literates or the other authors who write content for this Website. Download Best Mutual Fund for SIP PDF – use Print Friendly Button