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The best Systematic Investment Plans (SIPs) have the potential to grow your wealth over the long term while simultaneously weathering the impact of short term fluctuations.
In this blog, we’re going to tell you about the 12 best SIP mutual funds handpicked by our advisor, Wealth First. But before we jump in, let’s look at the benefits of investing using SIPs. You can consult a Cube Wealth Coach or download the Cube Wealth App.
Investing in the best SIPs is one of the smartest ways to generate wealth across market cycles. That means whether the markets go up or down you continue investing. Let’s look at all the SIP mutual fund benefits in depth.
The best SIPs in equity or international mutual funds have the potential to compound. This can help investors accumulate a large sum of money in the future. These funds have been known to generate close to 10-18% returns over 5+ years.
For example, here’s a hypothetical example of what could happen if you invested ₹10,000 per month each in an equity (@12%) or an international fund (@15%) for 10+ years.
Rupee cost averaging ensures you buy:
This will average out the impact of short term fluctuations and save you from the hassle of choosing the right time to invest. Here’s a hypothetical example of rupee cost averaging at work in SIPs Vs lump sum:
A SIP is affordable because you don’t have to invest a large sum of money or lump sum. Instead, you invest a small amount of money, as low as ₹1000, every month or quarter.
Here’s a sneak peek into SIPs currently being recommended by Cube’s mutual fund advisor, Wealth First and are perhaps the best SIPs to invest in for 10 to 20 years.
Equity funds primarily invest in the shares of Indian companies with the aim of generating lucrative long term returns. Starting a SIP in equity funds is known to be relatively less risky than buying stocks directly.
You can access the stock of some of the biggest companies and industry leaders in India like Infosys, HDFC Bank, Reliance Industries, TCS, and others by investing in Mirae Asset Large Cap Fund.
These companies are known as “large-cap” because of their stellar market capitalisation. In fact, more than 80% of Mirae Asset Large Cap Fund’s portfolio includes the shares of the top 100 Indian companies.
Here’s a snapshot of the top stocks held by Mirae Asset Large Cap Fund.
Canara Robeco Emerging Equities Fund essentially invests in large-cap and mid-cap companies that have the potential to become sector leaders in the future. This includes the likes of Axis Bank and Max Healthcare.
Furthermore, the fund managers are known to invest in high-quality companies instead of following the crowd and chasing short term profits. Over 50% of the fund’s portfolio is large-cap oriented.
Here’s a snapshot of the top stocks held by Canara Robeco Emerging Equities Fund.
You can access 25 of the best stocks in total from the large-cap, mid-cap, and small-cap categories by investing in Axis Focused 25 Fund. It’s a focused fund that can invest in up to 25 stocks, as the name suggests.
The aim of the fund is to generate long term returns with highly diversified stocks from different sectors like Info Edge, Avenue Supermarts, Pidilite Industries, and others.
Here’s a snapshot of the top stocks held by Axis Focused 25 Fund.
Debt funds are generally considered to fall under the low risk, predictable rewards category. They invest in debt instruments like government bonds, corporate bonds, money market instruments, and more. You can consult a Cube Wealth Coach or download the Cube Wealth App.
Starting a SIP in the IDFC Banking & PSU Debt Fund will allow you to access high-rated (AAA) bonds, certificates of deposit (CDs), commercial paper (CP), and other debt securities issued by PSUs and banks.
Here’s a snapshot of the top debt securities held by IDFC Banking & PSU Debt Fund.
There are debt funds that invest in bonds issued by large corporations. ICICI Prudential Corporate Bond Fund is one of these debt funds. It primarily invests in corporate bonds rated AA or above.
The average SIP return in the last 10 years produced by ICICI Prudential Corporate Bond Fund is more than 8%, which is far better than most bank FDs and savings accounts.
Here’s a snapshot of the top debt securities held by ICICI Prudential Corporate Bond Fund.
You can access high-rated bonds, T-bills, commercial paper, and other money market securities that mature in up to 1 year by investing in the HDFC Money Market Fund.
The average returns of this mutual fund in the past 10 years has been approximately 7.70%, which is better than most bank FDs.
Here’s a snapshot of the top debt securities held by HDFC Money Market Fund.
International funds are Indian mutual funds that invest in the shares of foreign companies like Apple, Amazon, Novartis, etc. They may even invest in the units of foreign mutual funds and ETFs.
Given their investment type, international funds are a high-risk, high-reward category of mutual funds that are suitable for the long term.
Edelweiss Greater China Equity Off-shore Fund invests in the JPMorgan Funds - JF Greater China Equity Fund that can give you access to top Chinese stocks Taiwan Semiconductor, Tencent, Alibaba, and more.
This is a “Fund of Fund” scheme that invests in another mutual fund instead of stocks or bonds. Cube’s advisor Wealth First has picked this as one of the best mutual funds for the long term as of 10-2021.
Here’s a snapshot of Edelweiss Greater China Equity Off-shore Fund’s top holding.
Certain mutual funds are known to operate in a feeder-master relationship where the feeder fund pools money from investors and invests it in the master fund.
That’s how Franklin India Feeder - Franklin U.S. Opportunities Fund operates. The master fund, Franklin U.S. Opportunities Fund can give you access to top US stocks like Apple, Amazon, Google, Microsoft, and more.
Here’s a snapshot of Franklin India Feeder - Franklin U.S. Opportunities Fund’s top holding.
PGIM India Global Equity Opportunities Fund is a fund of fund scheme that invests in the PGIM Jennison Global Equity Opportunities Fund, which invests in top global stocks like Tesla, Adyen, MercadoLibre, and more.
Here’s a snapshot of PGIM India Global Equity Opportunities Fund’s top holding.
Liquid funds fall under the category of debt funds. However, they're known to be relatively safer than other mutual funds and certain debt funds because their portfolio matures in 60-91 days.
You can access relatively better returns than your bank savings account by investing in the Nippon India Liquid Fund. It invests in debt securities that mature in 60-91 days.
What’s more, Nippon India Liquid Fund is Cube ATM compatible which means that you can instantly withdraw your investment in less than 30 minutes!
Here’s a snapshot of the top debt securities held by Nippon India Liquid Fund.
Invesco India Liquid Fund primarily invests in debt securities that mature in up to 3 months. The average SIP return of this fund in the last 10 years has outperformed the average bank savings account.
Here’s a snapshot of the top debt securities held by Invesco India Liquid Fund.
Investing in the Kotak Liquid Fund means that you can access high liquidity and relatively safe returns compared to equity funds because its portfolio matures in up to 3 months.
Here’s a snapshot of the top debt securities held by Kotak Liquid Fund.
Ans. Long-term SIP investments may qualify for tax benefits under Section 80C, 80CCD, and other relevant sections of the Income Tax Act. Consult with a tax advisor for personalized guidance.
Ans. It's advisable to review your long-term SIP investments annually or semi-annually to ensure they remain aligned with your goals and perform as expected.
Ans. Yes, you can have multiple SIPs running concurrently, each dedicated to different financial goals. This allows for better organization and customization of your investment strategy.
Ans. Setting up automatic SIPs ensures consistent and disciplined investing. It eliminates the need for manual contributions and helps you take advantage of rupee cost averaging.
Selecting the right SIPs for long-term investments is a significant step in building wealth and achieving financial goals. The twelve SIPs highlighted in this guide offer a diverse range of options for investors with a 10-20 year horizon. When choosing SIPs, it's crucial to evaluate their historical performance, expense ratios, and alignment with your financial objectives. Diversification across different asset classes is essential to mitigate risk and enhance the potential for returns. Periodic reviews of your SIP portfolio are vital to ensure it remains consistent with your evolving financial needs and market conditions. Seeking professional advice can offer valuable insights, helping you make informed decisions and potentially achieve your long-term financial aspirations. You can consult a Cube Wealth Coach or download the Cube Wealth App.
Watch this video to learn more about handpicked mutual funds on Cube Wealth
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