SIP or Systematic Investment Plan refers to an investment strategy that allows investors to invest a fixed amount of money at regular intervals in a mutual fund scheme. Systematic Investment Plan (SIP) has revolutionized the way people see investing by allowing them to make investments that are affordable and rewarding.

Best SIP Mutual Fund plans to invest in 2020

Here is a curated list of best mutual fund plans with SIP option you consider investing in 2020:

  1. ICICI Prudential Bluechip Fund – Direct Plan

AUM: Rs. 24,635 Crore

Expense ratio: 1.20%

Time Period

1 Year3 Years5 Years
Return12.36%12.67%

9.79%

Source: Value Research. Returns as of Date 11 December 2019.

ICICI Prudential Bluechip Fund is a Large-Cap fund that is predominantly invested in Indian stocks with around 92.53% investment in Large Cap Stocks. The fund has an investment of 7.47% in Mid-Cap Stocks. The fund has also maintained a 1.38% investment in debt fund all of which are government securities to balance out the volatility from equity investments.

This fund is best suited for investors who are here to stay invested over the long term and to earn high returns while taking a moderate risk.

  1. Mirae Asset Emerging Bluechip Fund – Direct Plan

AUM: Rs. 9,229 Crore

Expense ratio: 0.84%

Time Period

1 Year3 Years5 Years

Return

17.09%16.20%

16.58%

Source: Value Research. Returns as of Date 11 December 2019.

Mirae Asset Emerging Bluechip fund is a Large and Mid-Cap fund which is predominantly invested in Indian stocks with around 99.55% investment. The fund is spread across Large Cap Stocks, Mid-Cap Stocks and Small-Cap Stocks with 52.90%, 41.77%, and 5.33% respectively.

This fund is best suited for investors who are willing to stay invested for the long term, to earn high returns and have a moderate risk appetite.

  1. Parag Parikh Long Term Equity Fund – Direct Plan

AUM: Rs. 2,480 Crore

Expense ratio: 1.18%

Time Period

1 Year3 Years5 Years
Return13.91%13.50%

11.64%

Source: Value Research. Returns as of Date 11 December 2019.

Parag Parikh Long Term Equity Fund is a multi-cap fund 65.93% investment in Indian stocks and has the remaining investments invested in foreign markets. The fund is spread across Large-Cap, Mid-Cap and Small-Cap stocks with 64.97%, 23.19%, 11.84% respectively.

This fund is best suited for investors who are looking for exposure to global markets as well as to exposure to Indian Market. However, it is advisable to stay invested for the long term to earn high returns.

  1. DSP Midcap Fund – Direct Plan

AUM: Rs. 6,771 Crore

Expense ratio: 0.97%

Time Period

1 Year3 Years5 Years
Return12.46%10.62%

11.43%

Source: Value Research. Returns as of Date 11 December 2019.

DSP Midcap fund is a mutual fund of category Mid-Cap managed by the DSP Mutual Fund house. The fund has been performing quite well over the years with 21.94% investment in Large Cap stocks, 70.68% in Mid-Cap stocks and 7.40% in Small Cap stocks.

Investors with moderately high-risk appetite must look to invest in this fund that generates considerable returns throughout the investment.

  1. SBI Small Cap Fund – Direct Plan

AUM: Rs. 3,035 Crore

Expense ratio: 1.03%

Time Period

1 Year3 Years5 Years
Return9.53%14.48%

15.33%

Source: Value Research. Returns as of Date 11 December 2019.

Managed by the SBI Mutual Fund house, SBI Small Cap Fund is a great option for investing the SIP way. The fund predominantly invests in Small Cap stocks with 68.84% investment, 5.99% investment in Large Cap stocks and 25.17% investment in Mid-Cap stocks. Investors with moderate risk appetite must look to invest in this fund that generates considerable returns throughout the investment.

  1. Franklin India Smaller Companies Fund – Direct Plan

AUM: Rs. 6,953 Crore

Expense ratio: 0.95%

Time Period

1 Year3 Years5 Years
Return-3.30%3.28%

7.56%

Source: Value Research. Returns as of Date 11 December 2019.

Franklin India Smaller Companies fund is a small-cap fund managed by Franklin Templeton mutual fund house. The fund is diversified across Large-Cap, Mid-Cap and Small-Cap stocks with 14.92%, 15.92%, and 69.18% respectively. Investors with moderate risk appetite must look to invest in this fund that generates considerable returns throughout the investment.

  1. SBI Focused Equity Fund – Direct Plan

AUM: Rs. 6,526 Crore

Expense ratio: 1.01%

Time Period

1 Year3 Years5 Years
Return19.77%15.67%

12.36%

Source: Value Research. Returns as of Date 11 December 2019.

Managed by the SBI mutual fund house, SBI Focused Equity Fund is a great option for investing the SIP way. The fund falls under focused fund category predominantly investing in Large Cap Stocks with 59.20% investment, 10.42% in Small Cap stocks and 30.38% in Mid-Cap stocks. Investors with moderate risk appetite must look to invest in this fund that generates considerable returns throughout the investment.

  1. Motilal Oswal Multi-Cap 35 Fund – Direct Plan

AUM: Rs. 13,093 Crore

Expense ratio: 0.94%

Time Period

1 Year3 Years5 Years
Return9.04%11.50%

12.81%

Source: Value Research. Returns as of Date 11 December 2019.

Managed by the Motilal Oswal Fund House, Motilal Oswal Multicap 35 fund is a recommended multi-cap fund with a SIP option. The fund predominantly invests in Large Cap stocks with 90.19% investment, 1.47% in Small Cap stocks and 8.34% in Mid-Cap stocks. Investors with moderate risk appetite must look to invest in this fund that generates considerable returns throughout the investment.

What is a Mutual Fund?

A mutual fund is an investment made by the money pooled from various investors who are invested towards a common or similar goal and wish to earn profits over their investments. Both corporate and government securities can be bought by the money pooled from the investors and are professionally managed by an expert called fund manager. The funds can be classified based on their equity exposure, risk profile and loss coverage.

Investing in mutual funds can be done in two ways- Lumpsum Investment or Systematic Investment Plan (SIP) Investment. Lumpsum stands for investing one time in mutual funds with a heavy amount say investing Rs. 5 lakhs directly in one go. SIP or Systematic Investment Plan refers to gradually investing in mutual funds with a fixed amount at regular intervals.

What is Systematic Investment Plan (SIP)?

Systematic Investment Plan (SIP) has revolutionized the way people see investing by allowing them to make investments that are affordable and rewarding. With SIP, you can even opt for automated investing in which the set amount is auto-debited from your linked bank account at a fixed date according to the current Net Asset Value (NAV). SIP is available on a quarterly, monthly and weekly basis. SIP way has reduced the hassles in mutual fund investing and made it convenient for the investors to create wealth over the due course of the investment.

Another flexibility aspect of SIPs is that you are not bound to invest the set amount, you can always change the SIP value with the step-up or step-down feature as per your cash flow requirements.

So far, SIP has helped a lot of investors in easily managing their investment portfolio especially for beginners who are not well-versed with all the protocols and fundamentals of investing.

Benefits of Systematic Investment Plan (SIP)

  1. Rupee Cost Averaging
  2. Power of Compounding

Systematic Investment Plan (SIP) works on two major phenomena called Rupee cost averaging and power of compounding which make it an excellent choice for investing. These two features are highly favourable for the investors and help build up enormous wealth depending upon the investment made.

Rupee Cost Averaging

It refers to the technique which works on the principle of “Buying Cheap, Selling High”. Rupee cost averaging is simply the art of identifying funds that are undervalued or are due to some reason being sold cheap. When you by these funds at a lower price, keep them for some time and finally sell them during high valuations, you not only earn profits but also balance out any expensive purchase.

Power of Compounding

The power of compounding is another feather in the SIPs hat. When you make an investment in a mutual fund and keep invested for a considerable tenure say 5 years or 10 years, you are most likely to build up enormous wealth. This is because compounding works in your favour in these investments. When you invest in mutual fund through SIP, you earn some interest on your investment. This interest can either be withdrawn by opting for a dividend plan or can be reinvested using the growth plan. When you opt for the growth plan, the earned inters gets reinvested in your investment portfolio and is compounded back which earns exponential returns over the new and higher principal investment amount.